Correlation Between Advantage Portfolio and High Yield
Can any of the company-specific risk be diversified away by investing in both Advantage Portfolio 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 Advantage Portfolio and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Portfolio Class and High Yield Portfolio, you can compare the effects of market volatilities on Advantage Portfolio 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 Advantage Portfolio with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Portfolio and High Yield.
Diversification Opportunities for Advantage Portfolio and High Yield
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advantage and High is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Portfolio Class and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Portfolio and Advantage Portfolio 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 Advantage Portfolio Class 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 Portfolio has no effect on the direction of Advantage Portfolio i.e., Advantage Portfolio and High Yield go up and down completely randomly.
Pair Corralation between Advantage Portfolio and High Yield
Assuming the 90 days horizon Advantage Portfolio Class is expected to generate 10.61 times more return on investment than High Yield. However, Advantage Portfolio is 10.61 times more volatile than High Yield Portfolio. It trades about 0.25 of its potential returns per unit of risk. High Yield Portfolio is currently generating about 0.18 per unit of risk. If you would invest 2,041 in Advantage Portfolio Class on October 26, 2024 and sell it today you would earn a total of 531.00 from holding Advantage Portfolio Class or generate 26.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Portfolio Class vs. High Yield Portfolio
Performance |
| Timeline |
| Advantage Portfolio Class |
| High Yield Portfolio |
Advantage Portfolio and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Portfolio and High Yield
The main advantage of trading using opposite Advantage Portfolio and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Portfolio 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.| Advantage Portfolio vs. Growth Portfolio Class | Advantage Portfolio vs. Global Opportunity Portfolio | Advantage Portfolio vs. International Advantage Portfolio | Advantage Portfolio vs. Morgan Stanley Multi |
| High Yield vs. Fidelity Advisor Financial | High Yield vs. Financial Industries Fund | High Yield vs. Davis Financial Fund | High Yield vs. Davis Financial Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |