Correlation Between High Yield and F/m Investments
Can any of the company-specific risk be diversified away by investing in both High Yield and F/m Investments 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 High Yield and F/m Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Portfolio and Fm Investments Large, you can compare the effects of market volatilities on High Yield and F/m Investments 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 High Yield with a short position of F/m Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and F/m Investments.
Diversification Opportunities for High Yield and F/m Investments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High and F/m is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Portfolio and Fm Investments Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm Investments Large and High Yield 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 High Yield Portfolio are associated (or correlated) with F/m Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm Investments Large has no effect on the direction of High Yield i.e., High Yield and F/m Investments go up and down completely randomly.
Pair Corralation between High Yield and F/m Investments
Assuming the 90 days horizon High Yield Portfolio is expected to generate 0.07 times more return on investment than F/m Investments. However, High Yield Portfolio is 13.67 times less risky than F/m Investments. It trades about 0.29 of its potential returns per unit of risk. Fm Investments Large is currently generating about -0.13 per unit of risk. If you would invest 847.00 in High Yield Portfolio on October 20, 2024 and sell it today you would earn a total of 8.00 from holding High Yield Portfolio or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Portfolio vs. Fm Investments Large
Performance |
| Timeline |
| High Yield Portfolio |
| Fm Investments Large |
High Yield and F/m Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and F/m Investments
The main advantage of trading using opposite High Yield and F/m Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, F/m Investments 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 F/m Investments will offset losses from the drop in F/m Investments' long position.| High Yield vs. Emerging Markets Equity | High Yield vs. Global Fixed Income | High Yield vs. Global Fixed Income | High Yield vs. Global Fixed Income |
| F/m Investments vs. Fm Investments Large | F/m Investments vs. Cognios Market Neutral | F/m Investments vs. Central Europe Russia | F/m Investments vs. Thrivent Natural Resources |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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