Correlation Between Global Fixed and International Equity
Can any of the company-specific risk be diversified away by investing in both Global Fixed and International Equity 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 International Equity 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 International Equity Portfolio, you can compare the effects of market volatilities on Global Fixed and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Fixed and International Equity.
Diversification Opportunities for Global Fixed and International Equity
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and International is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Fixed Income and International Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Global Fixed i.e., Global Fixed and International Equity go up and down completely randomly.
Pair Corralation between Global Fixed and International Equity
Assuming the 90 days horizon Global Fixed is expected to generate 1.53 times less return on investment than International Equity. But when comparing it to its historical volatility, Global Fixed Income is 4.95 times less risky than International Equity. It trades about 0.2 of its potential returns per unit of risk. International Equity Portfolio is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,439 in International Equity Portfolio on September 12, 2024 and sell it today you would earn a total of 12.00 from holding International Equity Portfolio or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Fixed Income vs. International Equity Portfolio
Performance |
| Timeline |
| Global Fixed Income |
| International Equity |
Global Fixed and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Fixed and International Equity
The main advantage of trading using opposite Global Fixed and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Fixed position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Global Fixed vs. Highland Longshort Healthcare | Global Fixed vs. The Gabelli Healthcare | Global Fixed vs. Alphacentric Lifesci Healthcare | Global Fixed vs. Live Oak Health |
| International Equity vs. SCOR PK | International Equity vs. Morningstar Unconstrained Allocation | International Equity vs. Via Renewables | International Equity vs. Bondbloxx ETF Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |