Correlation Between Global Core and Core Fixed
Can any of the company-specific risk be diversified away by investing in both Global Core and Core 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 Core 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 Core Fixed Income, you can compare the effects of market volatilities on Global Core and Core 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 Core Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Core Fixed.
Diversification Opportunities for Global Core and Core Fixed
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Global and Core is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Core Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core 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 Core Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Fixed Income has no effect on the direction of Global Core i.e., Global Core and Core Fixed go up and down completely randomly.
Pair Corralation between Global Core and Core Fixed
Assuming the 90 days horizon Global E Portfolio is expected to generate 2.89 times more return on investment than Core Fixed. However, Global Core is 2.89 times more volatile than Core Fixed Income. It trades about 0.14 of its potential returns per unit of risk. Core Fixed Income is currently generating about -0.07 per unit of risk. If you would invest 2,110 in Global E Portfolio on August 26, 2024 and sell it today you would earn a total of 53.00 from holding Global E Portfolio or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Portfolio vs. Core Fixed Income
Performance |
| Timeline |
| Global E Portfolio |
| Core Fixed Income |
Global Core and Core Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Core and Core Fixed
The main advantage of trading using opposite Global Core and Core Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core position performs unexpectedly, Core 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 Core Fixed will offset losses from the drop in Core Fixed's long position.| Global Core vs. Morgan Stanley Multi | Global Core vs. Growth Portfolio Class | Global Core vs. Virtus Kar Small Cap | Global Core vs. Blackrock Science Technology |
| Core Fixed vs. Blackrock Health Sciences | Core Fixed vs. Baron Health Care | Core Fixed vs. Lord Abbett Health | Core Fixed vs. Health Biotchnology Portfolio |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |