Correlation Between Short Duration and Core Plus
Can any of the company-specific risk be diversified away by investing in both Short Duration and Core Plus 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 Short Duration and Core Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Strategic and Core Plus Fund, you can compare the effects of market volatilities on Short Duration and Core Plus 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 Short Duration with a short position of Core Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Core Plus.
Diversification Opportunities for Short Duration and Core Plus
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Short and Core is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Strategic and Core Plus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Fund and Short Duration 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 Short Duration Strategic are associated (or correlated) with Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Fund has no effect on the direction of Short Duration i.e., Short Duration and Core Plus go up and down completely randomly.
Pair Corralation between Short Duration and Core Plus
Assuming the 90 days horizon Short Duration Strategic is expected to generate 0.44 times more return on investment than Core Plus. However, Short Duration Strategic is 2.25 times less risky than Core Plus. It trades about 0.24 of its potential returns per unit of risk. Core Plus Fund is currently generating about 0.1 per unit of risk. If you would invest 892.00 in Short Duration Strategic on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Short Duration Strategic or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Strategic vs. Core Plus Fund
Performance |
| Timeline |
| Short Duration Strategic |
| Core Plus Fund |
Short Duration and Core Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Core Plus
The main advantage of trading using opposite Short Duration and Core Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, Core Plus 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 Core Plus will offset losses from the drop in Core Plus' long position.| Short Duration vs. SCOR PK | Short Duration vs. Morningstar Unconstrained Allocation | Short Duration vs. Via Renewables | Short Duration vs. Bondbloxx ETF Trust |
| Core Plus vs. Diversified Bond Fund | Core Plus vs. High Yield Fund Investor | Core Plus vs. Government Bond Fund | Core Plus vs. Short Duration Inflation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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