Correlation Between California High and Oklahoma College

Can any of the company-specific risk be diversified away by investing in both California High and Oklahoma College 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 High and Oklahoma College into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between California High Yield Municipal and Oklahoma College Savings, you can compare the effects of market volatilities on California High and Oklahoma College 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 High with a short position of Oklahoma College. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Oklahoma College.

Diversification Opportunities for California High and Oklahoma College

-0.08

Correlation Coefficient

California High  Oklahoma College

Good diversification

The 3 months correlation between California and Oklahoma is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings and California High 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 High Yield Municipal are associated (or correlated) with Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of California High i.e., California High and Oklahoma College go up and down completely randomly.

Pair Corralation between California High and Oklahoma College

Assuming the 90 days horizon California High is expected to generate 9.18 times less return on investment than Oklahoma College. But when comparing it to its historical volatility, California High Yield Municipal is 4.37 times less risky than Oklahoma College. It trades about 0.06 of its potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  813.00  in Oklahoma College Savings on September 26, 2024 and sell it today you would earn a total of  886.00  from holding Oklahoma College Savings or generate 108.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

California High Yield Municipa  vs.  Oklahoma College Savings

California High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oklahoma College Savings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oklahoma College may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with California High and Oklahoma College

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

The idea behind California High Yield Municipal and Oklahoma College Savings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.