Correlation Between Strategic Income and Commodities Strategy
Can any of the company-specific risk be diversified away by investing in both Strategic Income and Commodities Strategy 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 Commodities Strategy 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 Commodities Strategy Fund, you can compare the effects of market volatilities on Strategic Income and Commodities Strategy 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 Commodities Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Income and Commodities Strategy.
Diversification Opportunities for Strategic Income and Commodities Strategy
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Strategic and Commodities is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Income Fund and Commodities Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodities Strategy 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 Commodities Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodities Strategy has no effect on the direction of Strategic Income i.e., Strategic Income and Commodities Strategy go up and down completely randomly.
Pair Corralation between Strategic Income and Commodities Strategy
Assuming the 90 days horizon Strategic Income Fund is expected to generate 0.25 times more return on investment than Commodities Strategy. However, Strategic Income Fund is 4.06 times less risky than Commodities Strategy. It trades about 0.13 of its potential returns per unit of risk. Commodities Strategy Fund is currently generating about -0.08 per unit of risk. If you would invest 893.00 in Strategic Income Fund on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Strategic Income Fund or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Income Fund vs. Commodities Strategy Fund
Performance |
| Timeline |
| Strategic Income |
| Commodities Strategy |
Strategic Income and Commodities Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Income and Commodities Strategy
The main advantage of trading using opposite Strategic Income and Commodities Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Income position performs unexpectedly, Commodities Strategy 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 Commodities Strategy will offset losses from the drop in Commodities Strategy's long position.| Strategic Income vs. Rbc Emerging Markets | Strategic Income vs. Mondrian Emerging Markets | Strategic Income vs. Commodities Strategy Fund | Strategic Income vs. Templeton Emerging Markets |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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