Correlation Between High Yield and Advantage Portfolio
Can any of the company-specific risk be diversified away by investing in both High Yield and Advantage Portfolio 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 High Yield and Advantage Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund and Advantage Portfolio Class, you can compare the effects of market volatilities on High Yield and Advantage Portfolio 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 High Yield with a short position of Advantage Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Advantage Portfolio.
Diversification Opportunities for High Yield and Advantage Portfolio
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Advantage is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund and Advantage Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Portfolio Class and High Yield 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 High Yield Fund are associated (or correlated) with Advantage Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Portfolio Class has no effect on the direction of High Yield i.e., High Yield and Advantage Portfolio go up and down completely randomly.
Pair Corralation between High Yield and Advantage Portfolio
Assuming the 90 days horizon High Yield Fund is expected to under-perform the Advantage Portfolio. But the mutual fund apears to be less risky and, when comparing its historical volatility, High Yield Fund is 4.74 times less risky than Advantage Portfolio. The mutual fund trades about -0.26 of its potential returns per unit of risk. The Advantage Portfolio Class is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,464 in Advantage Portfolio Class on October 11, 2024 and sell it today you would lose (55.00) from holding Advantage Portfolio Class or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund vs. Advantage Portfolio Class
Performance |
| Timeline |
| High Yield Fund |
| Advantage Portfolio Class |
High Yield and Advantage Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Advantage Portfolio
The main advantage of trading using opposite High Yield and Advantage Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Advantage Portfolio 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 Advantage Portfolio will offset losses from the drop in Advantage Portfolio's long position.| High Yield vs. Allianzgi Diversified Income | High Yield vs. Schwab Small Cap Index | High Yield vs. Jhancock Diversified Macro | High Yield vs. Aqr Diversified Arbitrage |
| Advantage Portfolio vs. Lgm Risk Managed | Advantage Portfolio vs. Lord Abbett Short | Advantage Portfolio vs. Barings High Yield | Advantage Portfolio vs. Dunham High Yield |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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