Correlation Between High-yield Fund and High Yield
Can any of the company-specific risk be diversified away by investing in both High-yield Fund and High Yield 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 High Yield 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 High Yield Bond, you can compare the effects of market volatilities on High-yield Fund and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and High Yield.
Diversification Opportunities for High-yield Fund and High Yield
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between High-yield and High is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund Investor and High Yield Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Bond 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Bond has no effect on the direction of High-yield Fund i.e., High-yield Fund and High Yield go up and down completely randomly.
Pair Corralation between High-yield Fund and High Yield
Assuming the 90 days horizon High-yield Fund is expected to generate 1.03 times less return on investment than High Yield. But when comparing it to its historical volatility, High Yield Fund Investor is 1.19 times less risky than High Yield. It trades about 0.17 of its potential returns per unit of risk. High Yield Bond is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 990.00 in High Yield Bond on September 1, 2024 and sell it today you would earn a total of 6.00 from holding High Yield Bond or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund Investor vs. High Yield Bond
Performance |
| Timeline |
| High Yield Fund |
| High Yield Bond |
High-yield Fund and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Fund and High Yield
The main advantage of trading using opposite High-yield Fund and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| High-yield Fund vs. High Yield Municipal Fund | High-yield Fund vs. Diversified Bond Fund | High-yield Fund vs. Utilities Fund Investor | High-yield Fund vs. Emerging Markets Fund |
| High Yield vs. High Yield Bond | High Yield vs. Artisan High Income | High Yield vs. Tcw High Yield | High Yield vs. High Yield Strategy |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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