Correlation Between Inverse Government and High Yield
Can any of the company-specific risk be diversified away by investing in both Inverse Government and High Yield 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 Inverse Government and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Government Long and High Yield Strategy, you can compare the effects of market volatilities on Inverse Government and High Yield 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 Inverse Government with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Government and High Yield.
Diversification Opportunities for Inverse Government and High Yield
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and High is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and High Yield Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Strategy and Inverse Government 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 Inverse Government Long are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Strategy has no effect on the direction of Inverse Government i.e., Inverse Government and High Yield go up and down completely randomly.
Pair Corralation between Inverse Government and High Yield
Assuming the 90 days horizon Inverse Government Long is expected to under-perform the High Yield. In addition to that, Inverse Government is 3.28 times more volatile than High Yield Strategy. It trades about -0.21 of its total potential returns per unit of risk. High Yield Strategy is currently generating about 0.22 per unit of volatility. If you would invest 12,018 in High Yield Strategy on November 28, 2024 and sell it today you would earn a total of 152.00 from holding High Yield Strategy or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Government Long vs. High Yield Strategy
Performance |
| Timeline |
| Inverse Government Long |
| High Yield Strategy |
Inverse Government and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Government and High Yield
The main advantage of trading using opposite Inverse Government and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Inverse Government vs. Federated Government Income | Inverse Government vs. Us Government Securities | Inverse Government vs. Access Capital Munity | Inverse Government vs. Alpine Ultra Short |
| High Yield vs. Inverse High Yield | High Yield vs. Access Flex High | High Yield vs. Government Long Bond | High Yield vs. Real Estate Fund |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |