Correlation Between Income Growth and Short Duration
Can any of the company-specific risk be diversified away by investing in both Income Growth and Short Duration 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 Growth and Short Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Growth Fund and Short Duration Strategic, you can compare the effects of market volatilities on Income Growth and Short Duration 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 Growth with a short position of Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Short Duration.
Diversification Opportunities for Income Growth and Short Duration
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Income and Short is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Short Duration Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Strategic and Income Growth 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 Growth Fund are associated (or correlated) with Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Strategic has no effect on the direction of Income Growth i.e., Income Growth and Short Duration go up and down completely randomly.
Pair Corralation between Income Growth and Short Duration
If you would invest 3,727 in Income Growth Fund on September 2, 2024 and sell it today you would earn a total of 221.00 from holding Income Growth Fund or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Short Duration Strategic
Performance |
| Timeline |
| Income Growth |
| Short Duration Strategic |
Income Growth and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Short Duration
The main advantage of trading using opposite Income Growth and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Short Duration 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 Duration will offset losses from the drop in Short Duration's long position.| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth Fund |
| Short Duration vs. Diversified Bond Fund | Short Duration vs. High Yield Fund Investor | Short Duration vs. Short Duration Inflation | Short Duration vs. Core Plus 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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