Correlation Between California High and Ultra-short Fixed
Can any of the company-specific risk be diversified away by investing in both California High and Ultra-short Fixed 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 Ultra-short Fixed 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 Ultra Short Fixed Income, you can compare the effects of market volatilities on California High and Ultra-short Fixed 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 Ultra-short Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Ultra-short Fixed.
Diversification Opportunities for California High and Ultra-short Fixed
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Ultra-short is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Ultra Short Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short Fixed 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 Ultra-short Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Fixed has no effect on the direction of California High i.e., California High and Ultra-short Fixed go up and down completely randomly.
Pair Corralation between California High and Ultra-short Fixed
Assuming the 90 days horizon California High Yield Municipal is expected to generate 1.44 times more return on investment than Ultra-short Fixed. However, California High is 1.44 times more volatile than Ultra Short Fixed Income. It trades about 0.16 of its potential returns per unit of risk. Ultra Short Fixed Income is currently generating about 0.18 per unit of risk. If you would invest 951.00 in California High Yield Municipal on September 12, 2025 and sell it today you would earn a total of 13.00 from holding California High Yield Municipal or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Ultra Short Fixed Income
Performance |
| Timeline |
| California High Yield |
| Ultra Short Fixed |
California High and Ultra-short Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Ultra-short Fixed
The main advantage of trading using opposite California High and Ultra-short Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Ultra-short Fixed 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 Ultra-short Fixed will offset losses from the drop in Ultra-short Fixed's long position.| California High vs. Mid Cap Value | California High vs. Equity Growth Fund | California High vs. Income Growth Fund | California High vs. Diversified Bond Fund |
| Ultra-short Fixed vs. Pimco Diversified Income | Ultra-short Fixed vs. Victory Diversified Stock | Ultra-short Fixed vs. Manning Napier Diversified | Ultra-short Fixed vs. Aqr Diversified Arbitrage |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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