Correlation Between Balanced Fund and Limited Duration
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Limited Duration 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 Balanced Fund and Limited Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Limited Duration Fund, you can compare the effects of market volatilities on Balanced Fund and Limited Duration 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 Balanced Fund with a short position of Limited Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Limited Duration.
Diversification Opportunities for Balanced Fund and Limited Duration
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balanced and Limited is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Limited Duration Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limited Duration and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Limited Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limited Duration has no effect on the direction of Balanced Fund i.e., Balanced Fund and Limited Duration go up and down completely randomly.
Pair Corralation between Balanced Fund and Limited Duration
Assuming the 90 days horizon Balanced Fund Retail is expected to under-perform the Limited Duration. In addition to that, Balanced Fund is 4.04 times more volatile than Limited Duration Fund. It trades about -0.03 of its total potential returns per unit of risk. Limited Duration Fund is currently generating about 0.35 per unit of volatility. If you would invest 924.00 in Limited Duration Fund on November 29, 2024 and sell it today you would earn a total of 9.00 from holding Limited Duration Fund or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Balanced Fund Retail vs. Limited Duration Fund
Performance |
| Timeline |
| Balanced Fund Retail |
| Limited Duration |
Balanced Fund and Limited Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Limited Duration
The main advantage of trading using opposite Balanced Fund and Limited Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Limited Duration 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 Limited Duration will offset losses from the drop in Limited Duration's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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