Correlation Between Global Fixed and Corporate Bond
Can any of the company-specific risk be diversified away by investing in both Global Fixed and Corporate Bond 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 Global Fixed and Corporate Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Fixed Income and Corporate Bond Portfolio, you can compare the effects of market volatilities on Global Fixed and Corporate Bond 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 Global Fixed with a short position of Corporate Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Fixed and Corporate Bond.
Diversification Opportunities for Global Fixed and Corporate Bond
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Corporate is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global Fixed Income and Corporate Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Bond Portfolio and Global Fixed 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 Global Fixed Income are associated (or correlated) with Corporate Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Bond Portfolio has no effect on the direction of Global Fixed i.e., Global Fixed and Corporate Bond go up and down completely randomly.
Pair Corralation between Global Fixed and Corporate Bond
Assuming the 90 days horizon Global Fixed is expected to generate 1.59 times less return on investment than Corporate Bond. But when comparing it to its historical volatility, Global Fixed Income is 2.67 times less risky than Corporate Bond. It trades about 0.23 of its potential returns per unit of risk. Corporate Bond Portfolio is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,057 in Corporate Bond Portfolio on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Corporate Bond Portfolio or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Fixed Income vs. Corporate Bond Portfolio
Performance |
| Timeline |
| Global Fixed Income |
| Corporate Bond Portfolio |
Global Fixed and Corporate Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Fixed and Corporate Bond
The main advantage of trading using opposite Global Fixed and Corporate Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Fixed position performs unexpectedly, Corporate Bond 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 Corporate Bond will offset losses from the drop in Corporate Bond's long position.| Global Fixed vs. Emerging Markets Equity | Global Fixed vs. Global Fixed Income | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global E Portfolio |
| Corporate Bond vs. Emerging Markets Equity | Corporate Bond vs. Global Fixed Income | Corporate Bond vs. Global Fixed Income | Corporate Bond vs. Global Fixed Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |