Correlation Between Floating Rate and China Fund
Can any of the company-specific risk be diversified away by investing in both Floating Rate and China Fund 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 Floating Rate and China Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and China Fund, you can compare the effects of market volatilities on Floating Rate and China Fund 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 Floating Rate with a short position of China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and China Fund.
Diversification Opportunities for Floating Rate and China Fund
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Floating and China is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund and Floating Rate 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 Floating Rate Fund are associated (or correlated) with China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund has no effect on the direction of Floating Rate i.e., Floating Rate and China Fund go up and down completely randomly.
Pair Corralation between Floating Rate and China Fund
Assuming the 90 days horizon Floating Rate is expected to generate 19.64 times less return on investment than China Fund. But when comparing it to its historical volatility, Floating Rate Fund is 10.64 times less risky than China Fund. It trades about 0.12 of its potential returns per unit of risk. China Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,129 in China Fund on November 9, 2024 and sell it today you would earn a total of 82.00 from holding China Fund or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. China Fund
Performance |
| Timeline |
| Floating Rate |
| China Fund |
Floating Rate and China Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and China Fund
The main advantage of trading using opposite Floating Rate and China Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, China Fund 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 China Fund will offset losses from the drop in China Fund's long position.| Floating Rate vs. Blrc Sgy Mnp | Floating Rate vs. Touchstone Funds Group | Floating Rate vs. Growth Fund Of | Floating Rate vs. Issachar Fund Class |
| China Fund vs. Ashmore Group Plc | China Fund vs. Mexico Equity And | China Fund vs. Western Asset Managed | China Fund vs. Blackrock Muniholdings Quality |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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