Correlation Between Foreign Bond and Stocksplus Fund
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Stocksplus Fund 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 Foreign Bond and Stocksplus Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Stocksplus Fund Institutional, you can compare the effects of market volatilities on Foreign Bond and Stocksplus Fund 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 Foreign Bond with a short position of Stocksplus Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Stocksplus Fund.
Diversification Opportunities for Foreign Bond and Stocksplus Fund
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Foreign and Stocksplus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Stocksplus Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Fund Inst and Foreign 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 Foreign Bond Fund are associated (or correlated) with Stocksplus Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Fund Inst has no effect on the direction of Foreign Bond i.e., Foreign Bond and Stocksplus Fund go up and down completely randomly.
Pair Corralation between Foreign Bond and Stocksplus Fund
Assuming the 90 days horizon Foreign Bond Fund is expected to under-perform the Stocksplus Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Foreign Bond Fund is 1.83 times less risky than Stocksplus Fund. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Stocksplus Fund Institutional is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,361 in Stocksplus Fund Institutional on August 30, 2024 and sell it today you would earn a total of 41.00 from holding Stocksplus Fund Institutional or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Foreign Bond Fund vs. Stocksplus Fund Institutional
Performance |
| Timeline |
| Foreign Bond |
| Stocksplus Fund Inst |
Foreign Bond and Stocksplus Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Stocksplus Fund
The main advantage of trading using opposite Foreign Bond and Stocksplus Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Stocksplus Fund 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 Stocksplus Fund will offset losses from the drop in Stocksplus Fund's long position.| Foreign Bond vs. T Rowe Price | Foreign Bond vs. Rbb Fund | Foreign Bond vs. T Rowe Price | Foreign Bond vs. Issachar Fund Class |
| Stocksplus Fund vs. Realestaterealreturn Strategy Fund | Stocksplus Fund vs. Long Term Government Fund | Stocksplus Fund vs. T Rowe Price | Stocksplus Fund vs. Blackrock Advantage Small |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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