Correlation Between Inflation-protected and Balanced Strategy
Can any of the company-specific risk be diversified away by investing in both Inflation-protected and Balanced Strategy 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 Balanced Strategy 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 Balanced Strategy Fund, you can compare the effects of market volatilities on Inflation-protected and Balanced Strategy 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 Balanced Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Balanced Strategy.
Diversification Opportunities for Inflation-protected and Balanced Strategy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Inflation-protected and Balanced is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Balanced Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Strategy 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 Balanced Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Strategy has no effect on the direction of Inflation-protected i.e., Inflation-protected and Balanced Strategy go up and down completely randomly.
Pair Corralation between Inflation-protected and Balanced Strategy
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 0.92 times more return on investment than Balanced Strategy. However, Inflation Protected Bond Fund is 1.09 times less risky than Balanced Strategy. It trades about 0.42 of its potential returns per unit of risk. Balanced Strategy Fund is currently generating about 0.32 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 | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Balanced Strategy Fund
Performance |
| Timeline |
| Inflation Protected |
| Balanced Strategy |
Inflation-protected and Balanced Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Balanced Strategy
The main advantage of trading using opposite Inflation-protected and Balanced Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected position performs unexpectedly, Balanced Strategy 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 Balanced Strategy will offset losses from the drop in Balanced Strategy'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 |
| Balanced Strategy vs. T Rowe Price | Balanced Strategy vs. Dreyfusstandish Global Fixed | Balanced Strategy vs. Inflation Protected Bond Fund | Balanced Strategy vs. Touchstone Premium Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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