Correlation Between California Bond and Delaware Dividend

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

Diversification Opportunities for California Bond and Delaware Dividend

-0.5

Correlation Coefficient

California Bond  Delaware Dividend

Very good diversification

The 3 months correlation between California and Delaware is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Delaware Dividend Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Dividend Incm 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 Delaware Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Dividend Incm has no effect on the direction of California Bond i.e., California Bond and Delaware Dividend go up and down completely randomly.

Pair Corralation between California Bond and Delaware Dividend

If you would invest  1,043  in California Bond Fund on September 5, 2024 and sell it today you would earn a total of  10.00  from holding California Bond Fund or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

California Bond Fund  vs.  Delaware Dividend Incm

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.

Delaware Dividend Incm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delaware Dividend Incm has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Delaware Dividend 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 Delaware Dividend

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

The idea behind California Bond Fund and Delaware Dividend Incm 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.