Correlation Between Income Fund and Strategic Allocation
Can any of the company-specific risk be diversified away by investing in both Income Fund and Strategic Allocation 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 Income Fund and Strategic Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Strategic Allocation Aggressive, you can compare the effects of market volatilities on Income Fund and Strategic Allocation 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 Income Fund with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Strategic Allocation.
Diversification Opportunities for Income Fund and Strategic Allocation
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Income and Strategic is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Strategic Allocation Aggressiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Income Fund 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 Income Fund Of are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Income Fund i.e., Income Fund and Strategic Allocation go up and down completely randomly.
Pair Corralation between Income Fund and Strategic Allocation
Assuming the 90 days horizon Income Fund Of is expected to generate 0.78 times more return on investment than Strategic Allocation. However, Income Fund Of is 1.29 times less risky than Strategic Allocation. It trades about 0.21 of its potential returns per unit of risk. Strategic Allocation Aggressive is currently generating about -0.02 per unit of risk. If you would invest 2,514 in Income Fund Of on November 27, 2024 and sell it today you would earn a total of 43.00 from holding Income Fund Of or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Strategic Allocation Aggressiv
Performance |
| Timeline |
| Income Fund |
| Strategic Allocation |
Income Fund and Strategic Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Strategic Allocation
The main advantage of trading using opposite Income Fund and Strategic Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Strategic Allocation 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 Allocation will offset losses from the drop in Strategic Allocation's long position.| Income Fund vs. Capital Income Builder | Income Fund vs. Capital World Growth | Income Fund vs. American Balanced Fund | Income Fund vs. Growth Fund Of |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |