Correlation Between Low-duration Bond and Growth Equity
Can any of the company-specific risk be diversified away by investing in both Low-duration Bond and Growth Equity 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 Low-duration Bond and Growth Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Low Duration Bond Investor and Growth Equity Investor, you can compare the effects of market volatilities on Low-duration Bond and Growth Equity 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 Low-duration Bond with a short position of Growth Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Low-duration Bond and Growth Equity.
Diversification Opportunities for Low-duration Bond and Growth Equity
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Low-duration and Growth is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Low Duration Bond Investor and Growth Equity Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Equity Investor and Low-duration 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 Low Duration Bond Investor are associated (or correlated) with Growth Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Equity Investor has no effect on the direction of Low-duration Bond i.e., Low-duration Bond and Growth Equity go up and down completely randomly.
Pair Corralation between Low-duration Bond and Growth Equity
Assuming the 90 days horizon Low-duration Bond is expected to generate 78.83 times less return on investment than Growth Equity. But when comparing it to its historical volatility, Low Duration Bond Investor is 8.45 times less risky than Growth Equity. It trades about 0.03 of its potential returns per unit of risk. Growth Equity Investor is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,813 in Growth Equity Investor on September 1, 2024 and sell it today you would earn a total of 170.00 from holding Growth Equity Investor or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Low Duration Bond Investor vs. Growth Equity Investor
Performance |
| Timeline |
| Low Duration Bond |
| Growth Equity Investor |
Low-duration Bond and Growth Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Low-duration Bond and Growth Equity
The main advantage of trading using opposite Low-duration Bond and Growth Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Low-duration Bond position performs unexpectedly, Growth Equity 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 Growth Equity will offset losses from the drop in Growth Equity's long position.| Low-duration Bond vs. Multi Manager High Yield | Low-duration Bond vs. Artisan High Income | Low-duration Bond vs. Prudential Short Duration | Low-duration Bond vs. Legg Mason Partners |
| Growth Equity vs. Huber Capital Equity | Growth Equity vs. Calamos Global Equity | Growth Equity vs. Us Strategic Equity | Growth Equity vs. Balanced Fund Retail |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |