Correlation Between California Bond and Counterpoint Tactical

Can any of the company-specific risk be diversified away by investing in both California Bond and Counterpoint Tactical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining California Bond and Counterpoint Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between California Bond Fund and Counterpoint Tactical Equity, you can compare the effects of market volatilities on California Bond and Counterpoint Tactical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in California Bond with a short position of Counterpoint Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Counterpoint Tactical.

Diversification Opportunities for California Bond and Counterpoint Tactical

0.61

Correlation Coefficient

California Bond  Counterpoint Tactical

Poor diversification

The 3 months correlation between California and Counterpoint is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Counterpoint Tactical Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical and California Bond is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on California Bond Fund are associated (or correlated) with Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of California Bond i.e., California Bond and Counterpoint Tactical go up and down completely randomly.

Pair Corralation between California Bond and Counterpoint Tactical

Assuming the 90 days horizon California Bond is expected to generate 51.71 times less return on investment than Counterpoint Tactical. But when comparing it to its historical volatility, California Bond Fund is 3.22 times less risky than Counterpoint Tactical. It trades about 0.01 of its potential returns per unit of risk. Counterpoint Tactical Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,192  in Counterpoint Tactical Equity on October 25, 2024 and sell it today you would earn a total of  138.00  from holding Counterpoint Tactical Equity or generate 6.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

California Bond Fund  vs.  Counterpoint Tactical Equity

California Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, California Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Counterpoint Tactical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Counterpoint Tactical Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Counterpoint Tactical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with California Bond and Counterpoint Tactical

The main advantage of trading using opposite California Bond and Counterpoint Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Counterpoint Tactical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Counterpoint Tactical will offset losses from the drop in Counterpoint Tactical's long position.

The idea behind California Bond Fund and Counterpoint Tactical Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.