Correlation Between Income Fund and Short-term Bond
Can any of the company-specific risk be diversified away by investing in both Income Fund and Short-term Bond 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 Income Fund and Short-term Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Short Term Bond Fund, you can compare the effects of market volatilities on Income Fund and Short-term Bond 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 Income Fund with a short position of Short-term Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Short-term Bond.
Diversification Opportunities for Income Fund and Short-term Bond
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Income and Short-term is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Short Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Bond and Income 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 Income Fund Of are associated (or correlated) with Short-term Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Bond has no effect on the direction of Income Fund i.e., Income Fund and Short-term Bond go up and down completely randomly.
Pair Corralation between Income Fund and Short-term Bond
Assuming the 90 days horizon Income Fund Of is expected to generate 4.35 times more return on investment than Short-term Bond. However, Income Fund is 4.35 times more volatile than Short Term Bond Fund. It trades about 0.28 of its potential returns per unit of risk. Short Term Bond Fund is currently generating about 0.0 per unit of risk. If you would invest 2,568 in Income Fund Of on September 3, 2024 and sell it today you would earn a total of 60.00 from holding Income Fund Of or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Short Term Bond Fund
Performance |
| Timeline |
| Income Fund |
| Short Term Bond |
Income Fund and Short-term Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Short-term Bond
The main advantage of trading using opposite Income Fund and Short-term Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Short-term Bond 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 Short-term Bond will offset losses from the drop in Short-term Bond's long position.| Income Fund vs. Capital Income Builder | Income Fund vs. Capital World Growth | Income Fund vs. American Balanced | Income Fund vs. American Funds Fundamental |
| Short-term Bond vs. SPACE | Short-term Bond vs. Bayview Acquisition Corp | Short-term Bond vs. Ampleforth | Short-term Bond vs. ionet |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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