Correlation Between Inflation-protected and Pax High
Can any of the company-specific risk be diversified away by investing in both Inflation-protected and Pax High 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 Pax High 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 Pax High Yield, you can compare the effects of market volatilities on Inflation-protected and Pax High 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 Pax High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Pax High.
Diversification Opportunities for Inflation-protected and Pax High
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inflation-protected and Pax is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Pax High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax High Yield 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 Pax High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax High Yield has no effect on the direction of Inflation-protected i.e., Inflation-protected and Pax High go up and down completely randomly.
Pair Corralation between Inflation-protected and Pax High
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 2.93 times more return on investment than Pax High. However, Inflation-protected is 2.93 times more volatile than Pax High Yield. It trades about 0.42 of its potential returns per unit of risk. Pax High Yield is currently generating about 0.18 per unit of risk. If you would invest 1,021 in Inflation Protected Bond Fund on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Inflation Protected Bond Fund or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Pax High Yield
Performance |
| Timeline |
| Inflation Protected |
| Pax High Yield |
Inflation-protected and Pax High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Pax High
The main advantage of trading using opposite Inflation-protected and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected position performs unexpectedly, Pax High 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 Pax High will offset losses from the drop in Pax High's long position.| Inflation-protected vs. John Hancock Investment | Inflation-protected vs. Dunham Large Cap | Inflation-protected vs. American Mutual Fund | Inflation-protected vs. Americafirst Large Cap |
| Pax High vs. Inflation Protected Bond Fund | Pax High vs. Ab Bond Inflation | Pax High vs. Maryland Tax Free Bond | Pax High vs. Versatile Bond Portfolio |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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