Correlation Between Value Equity and Global Bond
Can any of the company-specific risk be diversified away by investing in both Value Equity and Global 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 Value Equity and Global Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Equity Investor and Global Bond Fund, you can compare the effects of market volatilities on Value Equity and Global 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 Value Equity with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Equity and Global Bond.
Diversification Opportunities for Value Equity and Global Bond
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Value and Global is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Value Equity Investor and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund and Value Equity 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 Value Equity Investor are associated (or correlated) with Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Value Equity i.e., Value Equity and Global Bond go up and down completely randomly.
Pair Corralation between Value Equity and Global Bond
Assuming the 90 days horizon Value Equity Investor is expected to generate 3.06 times more return on investment than Global Bond. However, Value Equity is 3.06 times more volatile than Global Bond Fund. It trades about 0.05 of its potential returns per unit of risk. Global Bond Fund is currently generating about 0.05 per unit of risk. If you would invest 1,762 in Value Equity Investor on November 9, 2024 and sell it today you would earn a total of 206.00 from holding Value Equity Investor or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Equity Investor vs. Global Bond Fund
Performance |
| Timeline |
| Value Equity Investor |
| Global Bond Fund |
Value Equity and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Equity and Global Bond
The main advantage of trading using opposite Value Equity and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Equity position performs unexpectedly, Global 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 Global Bond will offset losses from the drop in Global Bond's long position.| Value Equity vs. Gmo Quality Fund | Value Equity vs. Transamerica Funds | Value Equity vs. Auxier Focus Fund | Value Equity vs. Issachar Fund Class |
| Global Bond vs. Morningstar Municipal Bond | Global Bond vs. Lord Abbett Intermediate | Global Bond vs. Federated Muni And | Global Bond vs. Aig Government Money |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |