Correlation Between First American and Strategic Bond
Can any of the company-specific risk be diversified away by investing in both First American and Strategic 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 First American and Strategic Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and Strategic Bond Fund, you can compare the effects of market volatilities on First American and Strategic 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 First American with a short position of Strategic Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Strategic Bond.
Diversification Opportunities for First American and Strategic Bond
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Strategic is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and Strategic Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Bond and First American 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 First American Funds are associated (or correlated) with Strategic Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Bond has no effect on the direction of First American i.e., First American and Strategic Bond go up and down completely randomly.
Pair Corralation between First American and Strategic Bond
If you would invest 908.00 in Strategic Bond Fund on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Strategic Bond Fund or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Funds vs. Strategic Bond Fund
Performance |
| Timeline |
| First American Funds |
| Strategic Bond |
First American and Strategic Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Strategic Bond
The main advantage of trading using opposite First American and Strategic Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Strategic 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 Strategic Bond will offset losses from the drop in Strategic Bond's long position.| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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