Correlation Between Global Bond and Global Real
Can any of the company-specific risk be diversified away by investing in both Global Bond and Global Real 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 Global Real 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 Global Real Estate, you can compare the effects of market volatilities on Global Bond and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Global Real.
Diversification Opportunities for Global Bond and Global Real
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Global Bond i.e., Global Bond and Global Real go up and down completely randomly.
Pair Corralation between Global Bond and Global Real
Assuming the 90 days horizon Global Bond Fund is expected to under-perform the Global Real. But the mutual fund apears to be less risky and, when comparing its historical volatility, Global Bond Fund is 3.54 times less risky than Global Real. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Global Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 895.00 in Global Real Estate on October 23, 2024 and sell it today you would earn a total of 2.00 from holding Global Real Estate or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Global Real Estate
Performance |
| Timeline |
| Global Bond Fund |
| Global Real Estate |
Global Bond and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Global Real
The main advantage of trading using opposite Global Bond and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| Global Bond vs. Rmb Mendon Financial | Global Bond vs. John Hancock Financial | Global Bond vs. Vanguard Financials Index | Global Bond vs. Mesirow Financial Small |
| Global Real vs. Aamhimco Short Duration | Global Real vs. Fidelity Flex Servative | Global Real vs. Vanguard Short Term Government | Global Real vs. Rbc Short Duration |
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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