Correlation Between Foreign Bond and Short Precious
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Short Precious 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 Short Precious 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 Short Precious Metals, you can compare the effects of market volatilities on Foreign Bond and Short Precious 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 Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Short Precious.
Diversification Opportunities for Foreign Bond and Short Precious
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foreign and Short is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Foreign Bond i.e., Foreign Bond and Short Precious go up and down completely randomly.
Pair Corralation between Foreign Bond and Short Precious
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.24 times more return on investment than Short Precious. However, Foreign Bond Fund is 4.23 times less risky than Short Precious. It trades about 0.03 of its potential returns per unit of risk. Short Precious Metals is currently generating about -0.01 per unit of risk. If you would invest 713.00 in Foreign Bond Fund on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Foreign Bond Fund or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Short Precious Metals
Performance |
| Timeline |
| Foreign Bond |
| Short Precious Metals |
Foreign Bond and Short Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Short Precious
The main advantage of trading using opposite Foreign Bond and Short Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Short Precious 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 Precious will offset losses from the drop in Short Precious' long position.| Foreign Bond vs. Short Precious Metals | Foreign Bond vs. Gabelli Gold Fund | Foreign Bond vs. Goldman Sachs Short | Foreign Bond vs. Goldman Sachs Clean |
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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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