Correlation Between Absolute Convertible and Rmb Fund
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Rmb 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 Absolute Convertible and Rmb Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Rmb Fund I, you can compare the effects of market volatilities on Absolute Convertible and Rmb 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 Absolute Convertible with a short position of Rmb Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Rmb Fund.
Diversification Opportunities for Absolute Convertible and Rmb Fund
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Absolute and Rmb is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Rmb Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Fund I and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Rmb Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Fund I has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Rmb Fund go up and down completely randomly.
Pair Corralation between Absolute Convertible and Rmb Fund
Assuming the 90 days horizon Absolute Convertible is expected to generate 2.03 times less return on investment than Rmb Fund. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 10.08 times less risky than Rmb Fund. It trades about 0.38 of its potential returns per unit of risk. Rmb Fund I is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,831 in Rmb Fund I on September 13, 2024 and sell it today you would earn a total of 33.00 from holding Rmb Fund I or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Rmb Fund I
Performance |
| Timeline |
| Absolute Convertible |
| Rmb Fund I |
Absolute Convertible and Rmb Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Rmb Fund
The main advantage of trading using opposite Absolute Convertible and Rmb Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Rmb 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 Rmb Fund will offset losses from the drop in Rmb Fund's long position.| Absolute Convertible vs. Advent Claymore Convertible | Absolute Convertible vs. Fidelity Sai Convertible | Absolute Convertible vs. Virtus Convertible | Absolute Convertible vs. Putnam Convertible Incm Gwth |
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.
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