Correlation Between Cref Inflation-linked and Government Long
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Government Long 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 Cref Inflation-linked and Government Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Government Long Bond, you can compare the effects of market volatilities on Cref Inflation-linked and Government Long 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 Cref Inflation-linked with a short position of Government Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Government Long.
Diversification Opportunities for Cref Inflation-linked and Government Long
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cref and Government is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Government Long Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Long Bond and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Government Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Long Bond has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Government Long go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Government Long
Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to generate 0.21 times more return on investment than Government Long. However, Cref Inflation Linked Bond is 4.66 times less risky than Government Long. It trades about 0.31 of its potential returns per unit of risk. Government Long Bond is currently generating about 0.01 per unit of risk. If you would invest 8,483 in Cref Inflation Linked Bond on November 1, 2024 and sell it today you would earn a total of 89.00 from holding Cref Inflation Linked Bond or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Government Long Bond
Performance |
| Timeline |
| Cref Inflation Linked |
| Government Long Bond |
Cref Inflation-linked and Government Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Government Long
The main advantage of trading using opposite Cref Inflation-linked and Government Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Government Long 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 Government Long will offset losses from the drop in Government Long's long position.| Cref Inflation-linked vs. Ab High Income | Cref Inflation-linked vs. Virtus High Yield | Cref Inflation-linked vs. Barings High Yield | Cref Inflation-linked vs. Metropolitan West High |
| Government Long vs. Asg Managed Futures | Government Long vs. Ab Bond Inflation | Government Long vs. Cref Inflation Linked Bond | Government Long vs. Ab Bond Inflation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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