Correlation Between California Bond and Growth Fund

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

Diversification Opportunities for California Bond and Growth Fund

CaliforniaGrowthDiversified AwayCaliforniaGrowthDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between California and Growth is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of California Bond i.e., California Bond and Growth Fund go up and down completely randomly.

Pair Corralation between California Bond and Growth Fund

Assuming the 90 days horizon California Bond Fund is expected to generate 0.19 times more return on investment than Growth Fund. However, California Bond Fund is 5.24 times less risky than Growth Fund. It trades about -0.07 of its potential returns per unit of risk. Growth Fund Of is currently generating about -0.01 per unit of risk. If you would invest  1,046  in California Bond Fund on September 23, 2024 and sell it today you would lose (16.00) from holding California Bond Fund or give up 1.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

California Bond Fund  vs.  Growth Fund Of

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20246810
JavaScript chart by amCharts 3.21.15USCBX RGAEX
       Timeline  
California Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.310.3510.410.4510.5
Growth Fund 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec747678808284

California Bond and Growth Fund Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.44-0.24-0.088-0.0451-0.0042940.03420.07450.170.370.57 1234
JavaScript chart by amCharts 3.21.15USCBX RGAEX
       Returns  

Pair Trading with California Bond and Growth Fund

The main advantage of trading using opposite California Bond and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.
The idea behind California Bond Fund and Growth Fund Of 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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