Correlation Between Corporate Bond and International Opportunity
Can any of the company-specific risk be diversified away by investing in both Corporate Bond and International Opportunity 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 Corporate Bond and International Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Bond Portfolio and International Opportunity Portfolio, you can compare the effects of market volatilities on Corporate Bond and International Opportunity 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 Corporate Bond with a short position of International Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Bond and International Opportunity.
Diversification Opportunities for Corporate Bond and International Opportunity
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Corporate and International is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Bond Portfolio and International Opportunity Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Opportunity and Corporate Bond 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 Corporate Bond Portfolio are associated (or correlated) with International Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Opportunity has no effect on the direction of Corporate Bond i.e., Corporate Bond and International Opportunity go up and down completely randomly.
Pair Corralation between Corporate Bond and International Opportunity
Assuming the 90 days horizon Corporate Bond Portfolio is expected to generate 0.51 times more return on investment than International Opportunity. However, Corporate Bond Portfolio is 1.97 times less risky than International Opportunity. It trades about 0.08 of its potential returns per unit of risk. International Opportunity Portfolio is currently generating about 0.03 per unit of risk. If you would invest 1,058 in Corporate Bond Portfolio on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Corporate Bond Portfolio or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Bond Portfolio vs. International Opportunity Port
Performance |
| Timeline |
| Corporate Bond Portfolio |
| International Opportunity |
Corporate Bond and International Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Bond and International Opportunity
The main advantage of trading using opposite Corporate Bond and International Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Bond position performs unexpectedly, International Opportunity 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 International Opportunity will offset losses from the drop in International Opportunity's long position.| Corporate Bond vs. International Equity Portfolio | Corporate Bond vs. Royce Special Equity | Corporate Bond vs. Growth Portfolio Class | Corporate Bond vs. Small Pany Growth |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |