Correlation Between Global Core and Global Fixed
Can any of the company-specific risk be diversified away by investing in both Global Core and Global Fixed 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 Core and Global Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Global Fixed Income, you can compare the effects of market volatilities on Global Core and Global Fixed 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 Core with a short position of Global Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Global Fixed.
Diversification Opportunities for Global Core and Global Fixed
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GLOBAL and Global is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed Income and Global Core 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 E Portfolio are associated (or correlated) with Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Global Core i.e., Global Core and Global Fixed go up and down completely randomly.
Pair Corralation between Global Core and Global Fixed
Assuming the 90 days horizon Global E Portfolio is expected to generate 5.11 times more return on investment than Global Fixed. However, Global Core is 5.11 times more volatile than Global Fixed Income. It trades about 0.09 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.17 per unit of risk. If you would invest 2,089 in Global E Portfolio on November 1, 2024 and sell it today you would earn a total of 99.00 from holding Global E Portfolio or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Portfolio vs. Global Fixed Income
Performance |
| Timeline |
| Global E Portfolio |
| Global Fixed Income |
Global Core and Global Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Core and Global Fixed
The main advantage of trading using opposite Global Core and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core position performs unexpectedly, Global Fixed 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 Global Fixed will offset losses from the drop in Global Fixed's long position.| Global Core vs. Dunham Porategovernment Bond | Global Core vs. Short Term Government Fund | Global Core vs. Davis Government Bond | Global Core vs. Intermediate Government Bond |
| Global Fixed vs. Ab Municipal Bond | Global Fixed vs. Virtus Seix Government | Global Fixed vs. Morningstar Municipal Bond | Global Fixed vs. Blrc Sgy Mnp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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