Correlation Between Bond Fund and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Bond Fund and Absolute Convertible 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 Bond Fund and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Of and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Bond Fund and Absolute Convertible 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 Bond Fund with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Absolute Convertible.
Diversification Opportunities for Bond Fund and Absolute Convertible
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bond and Absolute is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Bond Fund 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 Bond Fund Of are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Bond Fund i.e., Bond Fund and Absolute Convertible go up and down completely randomly.
Pair Corralation between Bond Fund and Absolute Convertible
Assuming the 90 days horizon Bond Fund Of is expected to generate 4.31 times more return on investment than Absolute Convertible. However, Bond Fund is 4.31 times more volatile than Absolute Convertible Arbitrage. It trades about 0.2 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.38 per unit of risk. If you would invest 1,122 in Bond Fund Of on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Bond Fund Of or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bond Fund Of vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Bond Fund |
| Absolute Convertible |
Bond Fund and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and Absolute Convertible
The main advantage of trading using opposite Bond Fund and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Bond Fund vs. Pace International Emerging | Bond Fund vs. Ashmore Emerging Markets | Bond Fund vs. Shelton Emerging Markets | Bond Fund vs. Pnc Emerging Markets |
| Absolute Convertible vs. Advent Claymore Convertible | Absolute Convertible vs. Fidelity Sai Convertible | Absolute Convertible vs. Virtus Convertible | Absolute Convertible vs. Putnam Convertible Incm Gwth |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |