Correlation Between Equity Series and Core Bond
Can any of the company-specific risk be diversified away by investing in both Equity Series and Core Bond 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 Equity Series and Core Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Series Class and Core Bond Series, you can compare the effects of market volatilities on Equity Series and Core Bond 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 Equity Series with a short position of Core Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Series and Core Bond.
Diversification Opportunities for Equity Series and Core Bond
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equity and Core is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Equity Series Class and Core Bond Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Bond Series and Equity Series 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 Equity Series Class are associated (or correlated) with Core Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Bond Series has no effect on the direction of Equity Series i.e., Equity Series and Core Bond go up and down completely randomly.
Pair Corralation between Equity Series and Core Bond
Assuming the 90 days horizon Equity Series Class is expected to under-perform the Core Bond. In addition to that, Equity Series is 1.91 times more volatile than Core Bond Series. It trades about -0.28 of its total potential returns per unit of risk. Core Bond Series is currently generating about 0.24 per unit of volatility. If you would invest 911.00 in Core Bond Series on November 28, 2024 and sell it today you would earn a total of 16.00 from holding Core Bond Series or generate 1.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Equity Series Class vs. Core Bond Series
Performance |
Timeline |
Equity Series Class |
Core Bond Series |
Equity Series and Core Bond Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Equity Series and Core Bond
The main advantage of trading using opposite Equity Series and Core Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Series position performs unexpectedly, Core Bond 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 Core Bond will offset losses from the drop in Core Bond's long position.Equity Series vs. Large Cap Fund | Equity Series vs. Wasatch Large Cap | Equity Series vs. Westcore Plus Bond | Equity Series vs. Aberdeen Global High |
Core Bond vs. Dws Emerging Markets | Core Bond vs. Hartford Schroders Emerging | Core Bond vs. Goldman Sachs Emerging | Core Bond vs. Investec Emerging Markets |
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
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |