Correlation Between High-yield Fund and Sustainable Equity
Can any of the company-specific risk be diversified away by investing in both High-yield Fund and Sustainable Equity 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 High-yield Fund and Sustainable Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund Investor and Sustainable Equity Fund, you can compare the effects of market volatilities on High-yield Fund and Sustainable Equity 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 High-yield Fund with a short position of Sustainable Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and Sustainable Equity.
Diversification Opportunities for High-yield Fund and Sustainable Equity
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and Sustainable is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund Investor and Sustainable Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Equity and High-yield Fund 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 High Yield Fund Investor are associated (or correlated) with Sustainable Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Equity has no effect on the direction of High-yield Fund i.e., High-yield Fund and Sustainable Equity go up and down completely randomly.
Pair Corralation between High-yield Fund and Sustainable Equity
Assuming the 90 days horizon High-yield Fund is expected to generate 2.32 times less return on investment than Sustainable Equity. But when comparing it to its historical volatility, High Yield Fund Investor is 4.41 times less risky than Sustainable Equity. It trades about 0.19 of its potential returns per unit of risk. Sustainable Equity Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,201 in Sustainable Equity Fund on August 31, 2024 and sell it today you would earn a total of 587.00 from holding Sustainable Equity Fund or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund Investor vs. Sustainable Equity Fund
Performance |
| Timeline |
| High Yield Fund |
| Sustainable Equity |
High-yield Fund and Sustainable Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Fund and Sustainable Equity
The main advantage of trading using opposite High-yield Fund and Sustainable Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund position performs unexpectedly, Sustainable Equity 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 Sustainable Equity will offset losses from the drop in Sustainable Equity's long position.| High-yield Fund vs. High Yield Municipal Fund | High-yield Fund vs. Diversified Bond Fund | High-yield Fund vs. Ginnie Mae Fund | High-yield Fund vs. Utilities Fund Investor |
| Sustainable Equity vs. Aquagold International | Sustainable Equity vs. Morningstar Unconstrained Allocation | Sustainable Equity vs. Thrivent High Yield | Sustainable Equity vs. Via Renewables |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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