Correlation Between Global Technology and High Yield
Can any of the company-specific risk be diversified away by investing in both Global Technology 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 Global Technology and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and High Yield Fund R6, you can compare the effects of market volatilities on Global Technology 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 Global Technology with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and High Yield.
Diversification Opportunities for Global Technology and High Yield
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and High is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and High Yield Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Global Technology 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 Global Technology Portfolio 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 Fund has no effect on the direction of Global Technology i.e., Global Technology and High Yield go up and down completely randomly.
Pair Corralation between Global Technology and High Yield
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 6.86 times more return on investment than High Yield. However, Global Technology is 6.86 times more volatile than High Yield Fund R6. It trades about 0.15 of its potential returns per unit of risk. High Yield Fund R6 is currently generating about 0.1 per unit of risk. If you would invest 1,979 in Global Technology Portfolio on September 12, 2024 and sell it today you would earn a total of 203.00 from holding Global Technology Portfolio or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Global Technology Portfolio vs. High Yield Fund R6
Performance |
| Timeline |
| Global Technology |
| High Yield Fund |
Global Technology and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and High Yield
The main advantage of trading using opposite Global Technology and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology 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.| Global Technology vs. Lord Abbett Small | Global Technology vs. Pace Smallmedium Value | Global Technology vs. Fpa Queens Road | Global Technology vs. Applied Finance Explorer |
| High Yield vs. SCOR PK | High Yield vs. Morningstar Unconstrained Allocation | High Yield vs. Via Renewables | High Yield vs. Bondbloxx ETF Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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