Correlation Between Income Fund and Bond Fund
Can any of the company-specific risk be diversified away by investing in both Income Fund and Bond Fund 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 Bond Fund 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 Bond Fund Of, you can compare the effects of market volatilities on Income Fund and Bond Fund 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 Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Bond Fund.
Diversification Opportunities for Income Fund and Bond Fund
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Income and BOND is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Bond Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund 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 Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Income Fund i.e., Income Fund and Bond Fund go up and down completely randomly.
Pair Corralation between Income Fund and Bond Fund
Assuming the 90 days horizon Income Fund Of is expected to generate 1.19 times more return on investment than Bond Fund. However, Income Fund is 1.19 times more volatile than Bond Fund Of. It trades about 0.25 of its potential returns per unit of risk. Bond Fund Of is currently generating about 0.08 per unit of risk. If you would invest 2,571 in Income Fund Of on September 1, 2024 and sell it today you would earn a total of 57.00 from holding Income Fund Of or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Income Fund Of vs. Bond Fund Of
Performance |
| Timeline |
| Income Fund |
| Bond Fund |
Income Fund and Bond Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Bond Fund
The main advantage of trading using opposite Income Fund and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Bond Fund 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 Bond Fund will offset losses from the drop in Bond Fund'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 |
| Bond Fund vs. Qs Large Cap | Bond Fund vs. Legg Mason Bw | Bond Fund vs. Americafirst Large Cap | Bond Fund vs. Dodge Cox Stock |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |