Correlation Between Global Bond and Strategic Alternatives
Can any of the company-specific risk be diversified away by investing in both Global Bond and Strategic Alternatives 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 Global Bond and Strategic Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Strategic Alternatives Fund, you can compare the effects of market volatilities on Global Bond and Strategic Alternatives 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 Global Bond with a short position of Strategic Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Strategic Alternatives.
Diversification Opportunities for Global Bond and Strategic Alternatives
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Strategic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Strategic Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Alternatives and Global Bond 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 Global Bond Fund are associated (or correlated) with Strategic Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Alternatives has no effect on the direction of Global Bond i.e., Global Bond and Strategic Alternatives go up and down completely randomly.
Pair Corralation between Global Bond and Strategic Alternatives
Assuming the 90 days horizon Global Bond Fund is expected to generate 0.45 times more return on investment than Strategic Alternatives. However, Global Bond Fund is 2.21 times less risky than Strategic Alternatives. It trades about 0.02 of its potential returns per unit of risk. Strategic Alternatives Fund is currently generating about -0.07 per unit of risk. If you would invest 851.00 in Global Bond Fund on November 1, 2024 and sell it today you would earn a total of 3.00 from holding Global Bond Fund or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Strategic Alternatives Fund
Performance |
| Timeline |
| Global Bond Fund |
| Strategic Alternatives |
Global Bond and Strategic Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Strategic Alternatives
The main advantage of trading using opposite Global Bond and Strategic Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Strategic Alternatives 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 Alternatives will offset losses from the drop in Strategic Alternatives' long position.| Global Bond vs. Growth Allocation Fund | Global Bond vs. Defensive Market Strategies | Global Bond vs. Defensive Market Strategies | Global Bond vs. Value Equity Institutional |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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