Correlation Between California Bond and Msif Real

Can any of the company-specific risk be diversified away by investing in both California Bond and Msif Real 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 Msif Real 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 Msif Real Estate, you can compare the effects of market volatilities on California Bond and Msif Real 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 Msif Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Msif Real.

Diversification Opportunities for California Bond and Msif Real

-0.06

Correlation Coefficient

California Bond  Msif Real

Good diversification

The 3 months correlation between California and Msif is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Msif Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msif Real Estate 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 Msif Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msif Real Estate has no effect on the direction of California Bond i.e., California Bond and Msif Real go up and down completely randomly.

Pair Corralation between California Bond and Msif Real

Assuming the 90 days horizon California Bond is expected to generate 3.71 times less return on investment than Msif Real. But when comparing it to its historical volatility, California Bond Fund is 2.22 times less risky than Msif Real. It trades about 0.06 of its potential returns per unit of risk. Msif Real Estate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Msif Real Estate on September 4, 2024 and sell it today you would earn a total of  36.00  from holding Msif Real Estate or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

California Bond Fund  vs.  Msif Real Estate

California Bond

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in California Bond Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Msif Real Estate

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with California Bond and Msif Real

The main advantage of trading using opposite California Bond and Msif Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Msif Real 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 Msif Real will offset losses from the drop in Msif Real's long position.

The idea behind California Bond Fund and Msif Real Estate 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.