Correlation Between Inflation-protected and Global Core
Can any of the company-specific risk be diversified away by investing in both Inflation-protected and Global Core 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 Inflation-protected and Global Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Global E Portfolio, you can compare the effects of market volatilities on Inflation-protected and Global Core 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 Inflation-protected with a short position of Global Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Global Core.
Diversification Opportunities for Inflation-protected and Global Core
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inflation-protected and Global is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Inflation-protected 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 Inflation Protected Bond Fund are associated (or correlated) with Global Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Inflation-protected i.e., Inflation-protected and Global Core go up and down completely randomly.
Pair Corralation between Inflation-protected and Global Core
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 0.73 times more return on investment than Global Core. However, Inflation Protected Bond Fund is 1.37 times less risky than Global Core. It trades about -0.29 of its potential returns per unit of risk. Global E Portfolio is currently generating about -0.22 per unit of risk. If you would invest 1,058 in Inflation Protected Bond Fund on October 12, 2024 and sell it today you would lose (38.00) from holding Inflation Protected Bond Fund or give up 3.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Inflation Protected Bond Fund vs. Global E Portfolio
Performance |
Timeline |
Inflation Protected |
Global E Portfolio |
Inflation-protected and Global Core Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inflation-protected and Global Core
The main advantage of trading using opposite Inflation-protected and Global Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected position performs unexpectedly, Global Core 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 Core will offset losses from the drop in Global Core's long position.Inflation-protected vs. Global Diversified Income | Inflation-protected vs. Vy T Rowe | Inflation-protected vs. Guggenheim Diversified Income | Inflation-protected vs. Fulcrum Diversified Absolute |
Global Core vs. Guggenheim Managed Futures | Global Core vs. Atac Inflation Rotation | Global Core vs. Inflation Protected Bond Fund | Global Core vs. Aqr Managed Futures |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |