Correlation Between High Income and Strategic Income
Can any of the company-specific risk be diversified away by investing in both High Income and Strategic Income 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 Income and Strategic Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Income Fund and Strategic Income Fund, you can compare the effects of market volatilities on High Income and Strategic Income 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 Income with a short position of Strategic Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Income and Strategic Income.
Diversification Opportunities for High Income and Strategic Income
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between High and Strategic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Income Fund and Strategic Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Income and High Income 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 Income Fund are associated (or correlated) with Strategic Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Income has no effect on the direction of High Income i.e., High Income and Strategic Income go up and down completely randomly.
Pair Corralation between High Income and Strategic Income
Assuming the 90 days horizon High Income Fund is expected to generate 0.78 times more return on investment than Strategic Income. However, High Income Fund is 1.29 times less risky than Strategic Income. It trades about 0.15 of its potential returns per unit of risk. Strategic Income Fund is currently generating about -0.05 per unit of risk. If you would invest 863.00 in High Income Fund on September 12, 2024 and sell it today you would earn a total of 13.00 from holding High Income Fund or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Income Fund vs. Strategic Income Fund
Performance |
| Timeline |
| High Income Fund |
| Strategic Income |
High Income and Strategic Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Income and Strategic Income
The main advantage of trading using opposite High Income and Strategic Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Income position performs unexpectedly, Strategic Income 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 Strategic Income will offset losses from the drop in Strategic Income's long position.| High Income vs. Strategic Income Fund | High Income vs. High Yield Fund Investor | High Income vs. Disciplined Growth Fund | High Income vs. Small Cap Growth |
| Strategic Income vs. Short Duration Strategic | Strategic Income vs. Short Duration Fund | Strategic Income vs. High Yield Municipal Fund | Strategic Income vs. Emerging Markets Debt |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |