Correlation Between Commodities Strategy and Total Return
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Total Return 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 Commodities Strategy and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Total Return Bond, you can compare the effects of market volatilities on Commodities Strategy and Total Return 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 Commodities Strategy with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Total Return.
Diversification Opportunities for Commodities Strategy and Total Return
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commodities and Total is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Total Return go up and down completely randomly.
Pair Corralation between Commodities Strategy and Total Return
Assuming the 90 days horizon Commodities Strategy Fund is expected to generate 3.11 times more return on investment than Total Return. However, Commodities Strategy is 3.11 times more volatile than Total Return Bond. It trades about 0.35 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.05 per unit of risk. If you would invest 2,962 in Commodities Strategy Fund on October 25, 2024 and sell it today you would earn a total of 186.00 from holding Commodities Strategy Fund or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Total Return Bond
Performance |
| Timeline |
| Commodities Strategy |
| Total Return Bond |
Commodities Strategy and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Total Return
The main advantage of trading using opposite Commodities Strategy and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
| Total Return vs. Pgim Jennison Natural | Total Return vs. Salient Mlp Energy | Total Return vs. Goldman Sachs Mlp | Total Return vs. Virtus Select Mlp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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