Correlation Between Investec and High Yield
Can any of the company-specific risk be diversified away by investing in both Investec and High Yield 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 Investec and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Group and High Yield Municipal Fund, you can compare the effects of market volatilities on Investec and High Yield 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 Investec with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec and High Yield.
Diversification Opportunities for Investec and High Yield
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investec and High is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Investec Group and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Investec 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 Investec Group are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Investec i.e., Investec and High Yield go up and down completely randomly.
Pair Corralation between Investec and High Yield
Assuming the 90 days horizon Investec Group is expected to generate 4.29 times more return on investment than High Yield. However, Investec is 4.29 times more volatile than High Yield Municipal Fund. It trades about 0.21 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about -0.08 per unit of risk. If you would invest 1,062 in Investec Group on September 20, 2024 and sell it today you would earn a total of 42.00 from holding Investec Group or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Investec Group vs. High Yield Municipal Fund
Performance |
| Timeline |
| Investec Group |
| High Yield Municipal |
Investec and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec and High Yield
The main advantage of trading using opposite Investec and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Investec vs. SPENN Technology AS | Investec vs. OFX Group Ltd | Investec vs. HUMANA INC | Investec vs. Barloworld Ltd ADR |
| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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