Correlation Between Bond Fund and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Bond Fund and Multi Manager 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 Multi Manager 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 Multi Manager High Yield, you can compare the effects of market volatilities on Bond Fund and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Multi Manager.
Diversification Opportunities for Bond Fund and Multi Manager
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bond and Multi is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of Bond Fund i.e., Bond Fund and Multi Manager go up and down completely randomly.
Pair Corralation between Bond Fund and Multi Manager
Assuming the 90 days horizon Bond Fund Of is expected to generate 2.68 times more return on investment than Multi Manager. However, Bond Fund is 2.68 times more volatile than Multi Manager High Yield. It trades about 0.05 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.04 per unit of risk. If you would invest 1,125 in Bond Fund Of on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Bond Fund Of or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bond Fund Of vs. Multi Manager High Yield
Performance |
| Timeline |
| Bond Fund |
| Multi Manager High |
Bond Fund and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and Multi Manager
The main advantage of trading using opposite Bond Fund and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Bond Fund vs. The National Tax Free | Bond Fund vs. Nuveen All American Municipal | Bond Fund vs. California High Yield Municipal | Bond Fund vs. Counterpoint Tactical Municipal |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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