Correlation Between Inflation-adjusted and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Inflation-adjusted and Consumer Staples 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 Inflation-adjusted and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Adjusted Bond Fund and Consumer Staples Portfolio, you can compare the effects of market volatilities on Inflation-adjusted and Consumer Staples 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 Inflation-adjusted with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-adjusted and Consumer Staples.
Diversification Opportunities for Inflation-adjusted and Consumer Staples
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inflation-adjusted and Consumer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Adjusted Bond Fund and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Inflation-adjusted 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 Inflation Adjusted Bond Fund are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Inflation-adjusted i.e., Inflation-adjusted and Consumer Staples go up and down completely randomly.
Pair Corralation between Inflation-adjusted and Consumer Staples
Assuming the 90 days horizon Inflation Adjusted Bond Fund is expected to generate 0.36 times more return on investment than Consumer Staples. However, Inflation Adjusted Bond Fund is 2.79 times less risky than Consumer Staples. It trades about 0.06 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.01 per unit of risk. If you would invest 1,014 in Inflation Adjusted Bond Fund on November 9, 2024 and sell it today you would earn a total of 42.00 from holding Inflation Adjusted Bond Fund or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Adjusted Bond Fund vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Inflation Adjusted Bond |
| Consumer Staples Por |
Inflation-adjusted and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-adjusted and Consumer Staples
The main advantage of trading using opposite Inflation-adjusted and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-adjusted position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Inflation-adjusted vs. Jhvit International Small | Inflation-adjusted vs. Ab Small Cap | Inflation-adjusted vs. United Kingdom Small | Inflation-adjusted vs. Rbc Small Cap |
| Consumer Staples vs. United Kingdom Small | Consumer Staples vs. Nuveen Small Cap | Consumer Staples vs. Jhvit International Small | Consumer Staples vs. Cardinal Small Cap |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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