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 Fund, 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
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advantage and High is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Portfolio Class and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 Fund 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 10.49 times more return on investment than High Yield. However, Advantage Portfolio is 10.49 times more volatile than High Yield Fund. It trades about 0.51 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.37 per unit of risk. If you would invest 2,070 in Advantage Portfolio Class on August 28, 2024 and sell it today you would earn a total of 393.00 from holding Advantage Portfolio Class or generate 18.99% 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 Fund
Performance |
| Timeline |
| Advantage Portfolio Class |
| High Yield Fund |
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. Global Opportunity Portfolio | Advantage Portfolio vs. Morgan Stanley Multi | Advantage Portfolio vs. Ridgeworth Innovative Growth | Advantage Portfolio vs. Growth Portfolio Class |
| High Yield vs. Emerging Markets Equity | High Yield vs. Global Fixed Income | High Yield vs. Global Fixed Income | High Yield vs. Global Fixed Income |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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