Correlation Between Corporate Bond and Short Oil
Can any of the company-specific risk be diversified away by investing in both Corporate Bond and Short Oil 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 Short Oil 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 Short Oil Gas, you can compare the effects of market volatilities on Corporate Bond and Short Oil 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 Short Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Bond and Short Oil.
Diversification Opportunities for Corporate Bond and Short Oil
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Corporate and Short is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Bond Portfolio and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas 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 Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of Corporate Bond i.e., Corporate Bond and Short Oil go up and down completely randomly.
Pair Corralation between Corporate Bond and Short Oil
Assuming the 90 days horizon Corporate Bond Portfolio is expected to generate 0.32 times more return on investment than Short Oil. However, Corporate Bond Portfolio is 3.09 times less risky than Short Oil. It trades about 0.05 of its potential returns per unit of risk. Short Oil Gas is currently generating about -0.01 per unit of risk. If you would invest 962.00 in Corporate Bond Portfolio on September 2, 2024 and sell it today you would earn a total of 101.00 from holding Corporate Bond Portfolio or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Bond Portfolio vs. Short Oil Gas
Performance |
| Timeline |
| Corporate Bond Portfolio |
| Short Oil Gas |
Corporate Bond and Short Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Bond and Short Oil
The main advantage of trading using opposite Corporate Bond and Short Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Bond position performs unexpectedly, Short Oil 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 Short Oil will offset losses from the drop in Short Oil's long position.| Corporate Bond vs. Emerging Markets Equity | Corporate Bond vs. Global Fixed Income | Corporate Bond vs. Global Fixed Income | Corporate Bond vs. Global Fixed Income |
| Short Oil vs. Mutual Of America | Short Oil vs. Ultramid Cap Profund Ultramid Cap | Short Oil vs. Columbia Small Cap | Short Oil vs. Victory Rs Partners |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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