Correlation Between Global Fixed and High Yield
Can any of the company-specific risk be diversified away by investing in both Global Fixed and High Yield 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 High Yield 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 High Yield Portfolio, you can compare the effects of market volatilities on Global Fixed and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Fixed and High Yield.
Diversification Opportunities for Global Fixed and High Yield
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and High is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global Fixed Income and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Portfolio has no effect on the direction of Global Fixed i.e., Global Fixed and High Yield go up and down completely randomly.
Pair Corralation between Global Fixed and High Yield
Assuming the 90 days horizon Global Fixed is expected to generate 1.4 times less return on investment than High Yield. In addition to that, Global Fixed is 1.12 times more volatile than High Yield Portfolio. It trades about 0.17 of its total potential returns per unit of risk. High Yield Portfolio is currently generating about 0.27 per unit of volatility. If you would invest 849.00 in High Yield Portfolio on October 22, 2024 and sell it today you would earn a total of 7.00 from holding High Yield Portfolio or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Fixed Income vs. High Yield Portfolio
Performance |
| Timeline |
| Global Fixed Income |
| High Yield Portfolio |
Global Fixed and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Fixed and High Yield
The main advantage of trading using opposite Global Fixed and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Fixed position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Global Fixed vs. Deutsche Health And | Global Fixed vs. Tekla Healthcare Investors | Global Fixed vs. Lord Abbett Health | Global Fixed vs. Eventide Healthcare Life |
| High Yield vs. Franklin Natural Resources | High Yield vs. Clearbridge Energy Mlp | High Yield vs. Advisory Research Mlp | High Yield vs. Blackrock All Cap Energy |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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