Correlation Between Select Us and Strategic Bond
Can any of the company-specific risk be diversified away by investing in both Select Us 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 Select Us and Strategic Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Strategic Bond Fund, you can compare the effects of market volatilities on Select Us 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 Select Us with a short position of Strategic Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Us and Strategic Bond.
Diversification Opportunities for Select Us and Strategic Bond
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Select and Strategic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Select Equity 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 Select Us 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 Select Equity 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 Select Us i.e., Select Us and Strategic Bond go up and down completely randomly.
Pair Corralation between Select Us and Strategic Bond
Assuming the 90 days horizon Select Equity Fund is expected to under-perform the Strategic Bond. In addition to that, Select Us is 2.72 times more volatile than Strategic Bond Fund. It trades about -0.14 of its total potential returns per unit of risk. Strategic Bond Fund is currently generating about 0.29 per unit of volatility. If you would invest 885.00 in Strategic Bond Fund on December 1, 2024 and sell it today you would earn a total of 17.00 from holding Strategic Bond Fund or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Select Equity Fund vs. Strategic Bond Fund
Performance |
| Timeline |
| Select Equity |
| Strategic Bond |
Select Us and Strategic Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Us and Strategic Bond
The main advantage of trading using opposite Select Us and Strategic Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Us 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.| Select Us vs. Us Government Securities | Select Us vs. Us Government Securities | Select Us vs. John Hancock Government | Select Us vs. Transamerica Funds |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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