Correlation Between Intermediate Government and Inflation-adjusted
Can any of the company-specific risk be diversified away by investing in both Intermediate Government and Inflation-adjusted 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 Intermediate Government and Inflation-adjusted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Inflation Adjusted Bond Fund, you can compare the effects of market volatilities on Intermediate Government and Inflation-adjusted 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 Intermediate Government with a short position of Inflation-adjusted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Inflation-adjusted.
Diversification Opportunities for Intermediate Government and Inflation-adjusted
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intermediate and Inflation-adjusted is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond and Inflation Adjusted Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Adjusted Bond and Intermediate Government 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 Intermediate Government Bond are associated (or correlated) with Inflation-adjusted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Adjusted Bond has no effect on the direction of Intermediate Government i.e., Intermediate Government and Inflation-adjusted go up and down completely randomly.
Pair Corralation between Intermediate Government and Inflation-adjusted
Assuming the 90 days horizon Intermediate Government Bond is expected to generate 0.35 times more return on investment than Inflation-adjusted. However, Intermediate Government Bond is 2.86 times less risky than Inflation-adjusted. It trades about 0.12 of its potential returns per unit of risk. Inflation Adjusted Bond Fund is currently generating about 0.03 per unit of risk. If you would invest 875.00 in Intermediate Government Bond on November 6, 2024 and sell it today you would earn a total of 71.00 from holding Intermediate Government Bond or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Intermediate Government Bond vs. Inflation Adjusted Bond Fund
Performance |
| Timeline |
| Intermediate Government |
| Inflation Adjusted Bond |
Intermediate Government and Inflation-adjusted Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Inflation-adjusted
The main advantage of trading using opposite Intermediate Government and Inflation-adjusted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government position performs unexpectedly, Inflation-adjusted 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 Inflation-adjusted will offset losses from the drop in Inflation-adjusted's long position.The idea behind Intermediate Government Bond and Inflation Adjusted Bond Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Inflation-adjusted vs. Mid Cap Value | Inflation-adjusted vs. Equity Growth Fund | Inflation-adjusted vs. Income Growth Fund | Inflation-adjusted vs. Diversified Bond 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |