Correlation Between Rmb International and Rmb Fund
Can any of the company-specific risk be diversified away by investing in both Rmb International and Rmb Fund 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 Rmb International and Rmb Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rmb International Fund and Rmb Fund C, you can compare the effects of market volatilities on Rmb International and Rmb Fund 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 Rmb International with a short position of Rmb Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rmb International and Rmb Fund.
Diversification Opportunities for Rmb International and Rmb Fund
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rmb and Rmb is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Rmb International Fund and Rmb Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Fund C and Rmb International 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 Rmb International Fund are associated (or correlated) with Rmb Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Fund C has no effect on the direction of Rmb International i.e., Rmb International and Rmb Fund go up and down completely randomly.
Pair Corralation between Rmb International and Rmb Fund
Assuming the 90 days horizon Rmb International Fund is expected to under-perform the Rmb Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rmb International Fund is 1.05 times less risky than Rmb Fund. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Rmb Fund C is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,702 in Rmb Fund C on August 30, 2024 and sell it today you would earn a total of 84.00 from holding Rmb Fund C or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rmb International Fund vs. Rmb Fund C
Performance |
| Timeline |
| Rmb International |
| Rmb Fund C |
Rmb International and Rmb Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rmb International and Rmb Fund
The main advantage of trading using opposite Rmb International and Rmb Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rmb International position performs unexpectedly, Rmb Fund 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 Rmb Fund will offset losses from the drop in Rmb Fund's long position.| Rmb International vs. Gmo Resources | Rmb International vs. Goldman Sachs Mlp | Rmb International vs. Oil Gas Ultrasector | Rmb International vs. Guinness Atkinson Alternative |
| Rmb Fund vs. Fidelity Sai Convertible | Rmb Fund vs. Gabelli Convertible And | Rmb Fund vs. Calamos Dynamic Convertible | Rmb Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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