Correlation Between Bond Fund and Us Government
Can any of the company-specific risk be diversified away by investing in both Bond Fund and Us Government 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 Bond Fund and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Of and Us Government Securities, you can compare the effects of market volatilities on Bond Fund and Us Government 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 Bond Fund with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Us Government.
Diversification Opportunities for Bond Fund and Us Government
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bond and AMUSX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Bond Fund 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 Bond Fund Of are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Bond Fund i.e., Bond Fund and Us Government go up and down completely randomly.
Pair Corralation between Bond Fund and Us Government
Assuming the 90 days horizon Bond Fund Of is expected to generate 1.17 times more return on investment than Us Government. However, Bond Fund is 1.17 times more volatile than Us Government Securities. It trades about -0.12 of its potential returns per unit of risk. Us Government Securities is currently generating about -0.17 per unit of risk. If you would invest 1,130 in Bond Fund Of on August 25, 2024 and sell it today you would lose (9.00) from holding Bond Fund Of or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bond Fund Of vs. Us Government Securities
Performance |
| Timeline |
| Bond Fund |
| Us Government Securities |
Bond Fund and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and Us Government
The main advantage of trading using opposite Bond Fund and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Bond Fund vs. American High Income | Bond Fund vs. Europacific Growth Fund | Bond Fund vs. Capital World Bond | Bond Fund vs. Growth Fund Of |
| Us Government vs. Bond Fund Of | Us Government vs. Capital World Bond | Us Government vs. American Mutual Fund | Us Government vs. Smallcap World Fund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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