Correlation Between High Yield and Global Concentrated
Can any of the company-specific risk be diversified away by investing in both High Yield and Global Concentrated 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 Global Concentrated 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 Global Centrated Portfolio, you can compare the effects of market volatilities on High Yield and Global Concentrated 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 Global Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Global Concentrated.
Diversification Opportunities for High Yield and Global Concentrated
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of High Yield i.e., High Yield and Global Concentrated go up and down completely randomly.
Pair Corralation between High Yield and Global Concentrated
Assuming the 90 days horizon High Yield is expected to generate 3.78 times less return on investment than Global Concentrated. But when comparing it to its historical volatility, High Yield Fund is 4.6 times less risky than Global Concentrated. It trades about 0.16 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,876 in Global Centrated Portfolio on August 28, 2024 and sell it today you would earn a total of 573.00 from holding Global Centrated Portfolio or generate 30.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund vs. Global Centrated Portfolio
Performance |
| Timeline |
| High Yield Fund |
| Global Centrated Por |
High Yield and Global Concentrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Global Concentrated
The main advantage of trading using opposite High Yield and Global Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Global Concentrated 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 Concentrated will offset losses from the drop in Global Concentrated's long position.| High Yield vs. Emerging Markets Equity | High Yield vs. Global Fixed Income | High Yield vs. Global Fixed Income | High Yield vs. Global E Portfolio |
| Global Concentrated vs. Multisector Bond Sma | Global Concentrated vs. Versatile Bond Portfolio | Global Concentrated vs. Gmo Emerging Country | Global Concentrated vs. Maryland Tax Free Bond |
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 CEOs Directory module to screen CEOs from public companies around the world.
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