Correlation Between Balanced Fund and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Balanced Fund and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Floating Rate.
Diversification Opportunities for Balanced Fund and Floating Rate
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Floating is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Balanced Fund i.e., Balanced Fund and Floating Rate go up and down completely randomly.
Pair Corralation between Balanced Fund and Floating Rate
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 3.03 times more return on investment than Floating Rate. However, Balanced Fund is 3.03 times more volatile than Floating Rate Fund. It trades about 0.09 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.22 per unit of risk. If you would invest 1,138 in Balanced Fund Retail on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Balanced Fund Retail or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Floating Rate Fund
Performance |
| Timeline |
| Balanced Fund Retail |
| Floating Rate |
Balanced Fund and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Floating Rate
The main advantage of trading using opposite Balanced Fund and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate'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 |
| Floating Rate vs. Ms Global Fixed | Floating Rate vs. Us Strategic Equity | Floating Rate vs. Balanced Fund Retail | Floating Rate vs. Small Cap Equity |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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