Correlation Between Domini Impact and Domini International
Can any of the company-specific risk be diversified away by investing in both Domini Impact and Domini International 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 Domini Impact and Domini International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Domini Impact Bond and Domini International Opportunities, you can compare the effects of market volatilities on Domini Impact and Domini International 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 Domini Impact with a short position of Domini International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domini Impact and Domini International.
Diversification Opportunities for Domini Impact and Domini International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Domini and Domini is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Domini Impact Bond and Domini International Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini International and Domini Impact 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 Domini Impact Bond are associated (or correlated) with Domini International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini International has no effect on the direction of Domini Impact i.e., Domini Impact and Domini International go up and down completely randomly.
Pair Corralation between Domini Impact and Domini International
Assuming the 90 days horizon Domini Impact Bond is expected to generate 0.38 times more return on investment than Domini International. However, Domini Impact Bond is 2.61 times less risky than Domini International. It trades about -0.07 of its potential returns per unit of risk. Domini International Opportunities is currently generating about -0.13 per unit of risk. If you would invest 1,019 in Domini Impact Bond on August 28, 2024 and sell it today you would lose (15.00) from holding Domini Impact Bond or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Domini Impact Bond vs. Domini International Opportuni
Performance |
| Timeline |
| Domini Impact Bond |
| Domini International |
Domini Impact and Domini International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Domini Impact and Domini International
The main advantage of trading using opposite Domini Impact and Domini International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Domini Impact position performs unexpectedly, Domini International 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 Domini International will offset losses from the drop in Domini International's long position.| Domini Impact vs. Domini Impact Equity | Domini Impact vs. Domini Sustainable Solutions | Domini Impact vs. Domini Impact International | Domini Impact vs. Domini Impact International |
| Domini International vs. Domini Impact International | Domini International vs. Domini Impact Bond | Domini International vs. Domini Impact Equity | Domini International vs. Domini Sustainable Solutions |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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