Correlation Between Inflation Adjusted and Income Growth
Can any of the company-specific risk be diversified away by investing in both Inflation Adjusted and Income Growth 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 Income Growth 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 Income Growth Fund, you can compare the effects of market volatilities on Inflation Adjusted and Income Growth 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 Income Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Adjusted and Income Growth.
Diversification Opportunities for Inflation Adjusted and Income Growth
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inflation and Income is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Adjusted Bond Fund and Income Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Growth 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 Income Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Growth has no effect on the direction of Inflation Adjusted i.e., Inflation Adjusted and Income Growth go up and down completely randomly.
Pair Corralation between Inflation Adjusted and Income Growth
Assuming the 90 days horizon Inflation Adjusted Bond Fund is expected to under-perform the Income Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inflation Adjusted Bond Fund is 1.94 times less risky than Income Growth. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Income Growth Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,714 in Income Growth Fund on September 20, 2024 and sell it today you would earn a total of 44.00 from holding Income Growth Fund or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Inflation Adjusted Bond Fund vs. Income Growth Fund
Performance |
| Timeline |
| Inflation Adjusted Bond |
| Income Growth |
Inflation Adjusted and Income Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Adjusted and Income Growth
The main advantage of trading using opposite Inflation Adjusted and Income Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Adjusted position performs unexpectedly, Income Growth 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 Income Growth will offset losses from the drop in Income Growth's long position.| Inflation Adjusted vs. The National Tax Free | Inflation Adjusted vs. Touchstone Premium Yield | Inflation Adjusted vs. Doubleline Yield Opportunities | Inflation Adjusted vs. T Rowe Price |
| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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