Correlation Between Enhanced Fixed and Balanced Strategy
Can any of the company-specific risk be diversified away by investing in both Enhanced Fixed and Balanced Strategy 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 Enhanced Fixed and Balanced Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Fixed Income and Balanced Strategy Fund, you can compare the effects of market volatilities on Enhanced Fixed and Balanced Strategy 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 Enhanced Fixed with a short position of Balanced Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced Fixed and Balanced Strategy.
Diversification Opportunities for Enhanced Fixed and Balanced Strategy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enhanced and Balanced is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Fixed Income and Balanced Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Strategy and Enhanced Fixed 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 Enhanced Fixed Income are associated (or correlated) with Balanced Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Strategy has no effect on the direction of Enhanced Fixed i.e., Enhanced Fixed and Balanced Strategy go up and down completely randomly.
Pair Corralation between Enhanced Fixed and Balanced Strategy
Assuming the 90 days horizon Enhanced Fixed Income is expected to generate 0.67 times more return on investment than Balanced Strategy. However, Enhanced Fixed Income is 1.5 times less risky than Balanced Strategy. It trades about -0.13 of its potential returns per unit of risk. Balanced Strategy Fund is currently generating about -0.12 per unit of risk. If you would invest 1,014 in Enhanced Fixed Income on October 17, 2024 and sell it today you would lose (13.00) from holding Enhanced Fixed Income or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Fixed Income vs. Balanced Strategy Fund
Performance |
| Timeline |
| Enhanced Fixed Income |
| Balanced Strategy |
Enhanced Fixed and Balanced Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced Fixed and Balanced Strategy
The main advantage of trading using opposite Enhanced Fixed and Balanced Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced Fixed position performs unexpectedly, Balanced Strategy 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 Balanced Strategy will offset losses from the drop in Balanced Strategy's long position.| Enhanced Fixed vs. Rbc Global Equity | Enhanced Fixed vs. Harding Loevner Global | Enhanced Fixed vs. Asg Global Alternatives | Enhanced Fixed vs. Qs Global Equity |
| Balanced Strategy vs. Maryland Tax Free Bond | Balanced Strategy vs. Alliancebernstein Bond | Balanced Strategy vs. Enhanced Fixed Income | Balanced Strategy vs. Morningstar Defensive Bond |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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