Correlation Between Strategic Bond and Global Real
Can any of the company-specific risk be diversified away by investing in both Strategic Bond and Global Real 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 Strategic Bond and Global Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Bond Fund and Global Real Estate, you can compare the effects of market volatilities on Strategic Bond and Global Real 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 Strategic Bond with a short position of Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Bond and Global Real.
Diversification Opportunities for Strategic Bond and Global Real
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Strategic and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Bond Fund and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate and Strategic Bond 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 Strategic Bond Fund are associated (or correlated) with Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Strategic Bond i.e., Strategic Bond and Global Real go up and down completely randomly.
Pair Corralation between Strategic Bond and Global Real
Assuming the 90 days horizon Strategic Bond is expected to generate 2.4 times less return on investment than Global Real. But when comparing it to its historical volatility, Strategic Bond Fund is 2.26 times less risky than Global Real. It trades about 0.13 of its potential returns per unit of risk. Global Real Estate is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,078 in Global Real Estate on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Global Real Estate or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Bond Fund vs. Global Real Estate
Performance |
| Timeline |
| Strategic Bond |
| Global Real Estate |
Strategic Bond and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Bond and Global Real
The main advantage of trading using opposite Strategic Bond and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Bond position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| Strategic Bond vs. International Developed Markets | Strategic Bond vs. Global Real Estate | Strategic Bond vs. Global Real Estate | Strategic Bond vs. Global Real Estate |
| Global Real vs. Massmutual Premier Diversified | Global Real vs. Aqr Diversified Arbitrage | Global Real vs. Calvert Conservative Allocation | Global Real vs. Huber Capital Diversified |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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