Correlation Between Strategic Allocation: and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation: and Floating Rate 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 Strategic Allocation: and Floating Rate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Moderate and Floating Rate Income, you can compare the effects of market volatilities on Strategic Allocation: and Floating Rate 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 Strategic Allocation: with a short position of Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation: and Floating Rate.
Diversification Opportunities for Strategic Allocation: and Floating Rate
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STRATEGIC and Floating is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Moderate and Floating Rate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate Income and Strategic Allocation: 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 Strategic Allocation Moderate are associated (or correlated) with Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate Income has no effect on the direction of Strategic Allocation: i.e., Strategic Allocation: and Floating Rate go up and down completely randomly.
Pair Corralation between Strategic Allocation: and Floating Rate
Assuming the 90 days horizon Strategic Allocation: is expected to generate 1.05 times less return on investment than Floating Rate. In addition to that, Strategic Allocation: is 2.75 times more volatile than Floating Rate Income. It trades about 0.07 of its total potential returns per unit of risk. Floating Rate Income is currently generating about 0.21 per unit of volatility. If you would invest 618.00 in Floating Rate Income on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Floating Rate Income or generate 24.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Allocation Moderate vs. Floating Rate Income
Performance |
| Timeline |
| Strategic Allocation: |
| Floating Rate Income |
Strategic Allocation: and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation: and Floating Rate
The main advantage of trading using opposite Strategic Allocation: and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation: position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Strategic Allocation: vs. T Rowe Price | Strategic Allocation: vs. Versatile Bond Portfolio | Strategic Allocation: vs. Ab Global Bond | Strategic Allocation: vs. Ab Impact Municipal |
| Floating Rate vs. T Rowe Price | Floating Rate vs. Oppenheimer International Diversified | Floating Rate vs. Jhancock Diversified Macro | Floating Rate vs. Fidelity Advisor Diversified |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |