Correlation Between Metropolitan West and Ing Intermediate
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Ing Intermediate 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 Metropolitan West and Ing Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Ing Intermediate Bond, you can compare the effects of market volatilities on Metropolitan West and Ing Intermediate 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 Metropolitan West with a short position of Ing Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Ing Intermediate.
Diversification Opportunities for Metropolitan West and Ing Intermediate
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metropolitan and Ing is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Ing Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ing Intermediate Bond and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Ing Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ing Intermediate Bond has no effect on the direction of Metropolitan West i.e., Metropolitan West and Ing Intermediate go up and down completely randomly.
Pair Corralation between Metropolitan West and Ing Intermediate
Assuming the 90 days horizon Metropolitan West is expected to generate 1.02 times less return on investment than Ing Intermediate. But when comparing it to its historical volatility, Metropolitan West High is 2.54 times less risky than Ing Intermediate. It trades about 0.21 of its potential returns per unit of risk. Ing Intermediate Bond is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,084 in Ing Intermediate Bond on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Ing Intermediate Bond or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Ing Intermediate Bond
Performance |
| Timeline |
| Metropolitan West High |
| Ing Intermediate Bond |
Metropolitan West and Ing Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Ing Intermediate
The main advantage of trading using opposite Metropolitan West and Ing Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Ing Intermediate 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 Ing Intermediate will offset losses from the drop in Ing Intermediate's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Ing Intermediate vs. Ppm High Yield | Ing Intermediate vs. Ab High Income | Ing Intermediate vs. Metropolitan West High | Ing Intermediate vs. Multimanager Lifestyle Aggressive |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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