Correlation Between California Bond and Manning Napier

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

Diversification Opportunities for California Bond and Manning Napier

0.26

Correlation Coefficient

California Bond  Manning Napier

Modest diversification

The 3 months correlation between California and Manning is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Manning Napier Callodine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Callodine 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 Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Callodine has no effect on the direction of California Bond i.e., California Bond and Manning Napier go up and down completely randomly.

Pair Corralation between California Bond and Manning Napier

Assuming the 90 days horizon California Bond is expected to generate 11.72 times less return on investment than Manning Napier. But when comparing it to its historical volatility, California Bond Fund is 3.19 times less risky than Manning Napier. It trades about 0.05 of its potential returns per unit of risk. Manning Napier Callodine is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,402  in Manning Napier Callodine on September 8, 2024 and sell it today you would earn a total of  149.00  from holding Manning Napier Callodine or generate 10.63% return on investment over 90 days.

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

California Bond Fund  vs.  Manning Napier Callodine

California Bond

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in California Bond Fund are ranked lower than 3 (%) 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.

Manning Napier Callodine

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manning Napier Callodine are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Manning Napier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with California Bond and Manning Napier

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

The idea behind California Bond Fund and Manning Napier Callodine 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.