Correlation Between Global Fixed and Global Real
Can any of the company-specific risk be diversified away by investing in both Global Fixed and Global Real 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 Global Real 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 Global Real Estate, you can compare the effects of market volatilities on Global Fixed and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Fixed and Global Real.
Diversification Opportunities for Global Fixed and Global Real
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Fixed Income and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Global Fixed i.e., Global Fixed and Global Real go up and down completely randomly.
Pair Corralation between Global Fixed and Global Real
If you would invest 523.00 in Global Fixed Income on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Global Fixed Income or generate 0.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 66.67% |
Values | Daily Returns |
Global Fixed Income vs. Global Real Estate
Performance |
Timeline |
Global Fixed Income |
Global Real Estate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Global Fixed and Global Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Fixed and Global Real
The main advantage of trading using opposite Global Fixed and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Fixed position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.Global Fixed vs. Emerging Markets Equity | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global Centrated Portfolio |
Global Real vs. Emerging Markets Equity | Global Real vs. Global Fixed Income | Global Real vs. Global Fixed Income | Global Real 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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