Correlation Between PBSM and PBND
Can any of the company-specific risk be diversified away by investing in both PBSM and PBND 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 PBSM and PBND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PBSM and PBND, you can compare the effects of market volatilities on PBSM and PBND 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 PBSM with a short position of PBND. Check out your portfolio center. Please also check ongoing floating volatility patterns of PBSM and PBND.
Diversification Opportunities for PBSM and PBND
Significant diversification
The 3 months correlation between PBSM and PBND is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PBSM and PBND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBND and PBSM 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 PBSM are associated (or correlated) with PBND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBND has no effect on the direction of PBSM i.e., PBSM and PBND go up and down completely randomly.
Pair Corralation between PBSM and PBND
If you would invest 2,177 in PBND on August 25, 2024 and sell it today you would earn a total of 0.00 from holding PBND or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PBSM vs. PBND
Performance |
| Timeline |
| PBSM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PBND |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PBSM and PBND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PBSM and PBND
The main advantage of trading using opposite PBSM and PBND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PBSM position performs unexpectedly, PBND 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 PBND will offset losses from the drop in PBND's long position.| PBSM vs. Invesco PureBeta MSCI | PBSM vs. Oppenheimer Russell 2000 | PBSM vs. Aquagold International | PBSM vs. Morningstar Unconstrained Allocation |
| PBND vs. Invesco PureBeta 0 5 | PBND vs. Invesco PureBeta MSCI | PBND vs. Aquagold International | PBND vs. Morningstar Unconstrained Allocation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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