Correlation Between Growth Strategy and Strategic Bond
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Strategic Bond 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 Growth Strategy and Strategic Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and Strategic Bond Fund, you can compare the effects of market volatilities on Growth Strategy and Strategic Bond 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 Growth Strategy with a short position of Strategic Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Strategic Bond.
Diversification Opportunities for Growth Strategy and Strategic Bond
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and Strategic is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Strategic Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Bond and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Strategic Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Bond has no effect on the direction of Growth Strategy i.e., Growth Strategy and Strategic Bond go up and down completely randomly.
Pair Corralation between Growth Strategy and Strategic Bond
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 1.56 times more return on investment than Strategic Bond. However, Growth Strategy is 1.56 times more volatile than Strategic Bond Fund. It trades about 0.07 of its potential returns per unit of risk. Strategic Bond Fund is currently generating about 0.02 per unit of risk. If you would invest 1,018 in Growth Strategy Fund on August 25, 2024 and sell it today you would earn a total of 267.00 from holding Growth Strategy Fund or generate 26.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Strategic Bond Fund
Performance |
| Timeline |
| Growth Strategy |
| Strategic Bond |
Growth Strategy and Strategic Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Strategic Bond
The main advantage of trading using opposite Growth Strategy and Strategic Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Strategic Bond 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 Strategic Bond will offset losses from the drop in Strategic Bond's long position.| Growth Strategy vs. Financials Ultrasector Profund | Growth Strategy vs. Vanguard Financials Index | Growth Strategy vs. 1919 Financial Services | Growth Strategy vs. John Hancock Financial |
| Strategic Bond vs. Aqr Long Short Equity | Strategic Bond vs. Maryland Short Term Tax Free | Strategic Bond vs. Angel Oak Ultrashort | Strategic Bond vs. Guggenheim Long Short |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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