Correlation Between Us Government and Gurtin California

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

By analyzing existing cross correlation between Us Government Plus and Gurtin California Muni, you can compare the effects of market volatilities on Us Government and Gurtin California 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 Us Government with a short position of Gurtin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Gurtin California.

Diversification Opportunities for Us Government and Gurtin California

0.39

Correlation Coefficient

Us Government  Gurtin California

Weak diversification

The 3 months correlation between GVPIX and Gurtin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and Gurtin California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gurtin California Muni and Us Government 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 Us Government Plus are associated (or correlated) with Gurtin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gurtin California Muni has no effect on the direction of Us Government i.e., Us Government and Gurtin California go up and down completely randomly.

Pair Corralation between Us Government and Gurtin California

Assuming the 90 days horizon Us Government Plus is expected to under-perform the Gurtin California. In addition to that, Us Government is 4.0 times more volatile than Gurtin California Muni. It trades about -0.06 of its total potential returns per unit of risk. Gurtin California Muni is currently generating about -0.01 per unit of volatility. If you would invest  997.00  in Gurtin California Muni on March 7, 2025 and sell it today you would lose (3.00) from holding Gurtin California Muni or give up 0.3% of portfolio value over 90 days.

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

Us Government Plus  vs.  Gurtin California Muni

Us Government Plus

Risk-Adjusted Performance

Very Weak

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

Gurtin California Muni

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Us Government and Gurtin California

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

The idea behind Us Government Plus and Gurtin California Muni 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.