Correlation Between Strategic Income and Short Duration
Can any of the company-specific risk be diversified away by investing in both Strategic Income 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 Strategic Income and Short Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Income Fund and Short Duration Strategic, you can compare the effects of market volatilities on Strategic Income 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 Strategic Income with a short position of Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Income and Short Duration.
Diversification Opportunities for Strategic Income and Short Duration
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Strategic and Short is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Income 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 Strategic Income 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 Income 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 Strategic Income i.e., Strategic Income and Short Duration go up and down completely randomly.
Pair Corralation between Strategic Income and Short Duration
Assuming the 90 days horizon Strategic Income Fund is expected to under-perform the Short Duration. In addition to that, Strategic Income is 1.39 times more volatile than Short Duration Strategic. It trades about -0.03 of its total potential returns per unit of risk. Short Duration Strategic is currently generating about 0.08 per unit of volatility. If you would invest 894.00 in Short Duration Strategic on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Short Duration Strategic or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Income Fund vs. Short Duration Strategic
Performance |
| Timeline |
| Strategic Income |
| Short Duration Strategic |
Strategic Income and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Income and Short Duration
The main advantage of trading using opposite Strategic Income and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Income 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.| Strategic Income vs. Short Duration Strategic | Strategic Income vs. Short Duration Fund | Strategic Income vs. High Yield Municipal Fund | Strategic Income vs. Emerging Markets Debt |
| Short Duration vs. Strategic Income Fund | Short Duration vs. Short Duration Inflation | Short Duration vs. Sustainable Equity Fund | Short Duration vs. High Yield Fund Investor |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |