Correlation Between High Yield and Ultra Short
Can any of the company-specific risk be diversified away by investing in both High Yield and Ultra Short 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 Ultra Short 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 Ultra Short Income, you can compare the effects of market volatilities on High Yield and Ultra Short 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 Ultra Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Ultra Short.
Diversification Opportunities for High Yield and Ultra Short
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Ultra is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund and Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short Income 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 Ultra Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Income has no effect on the direction of High Yield i.e., High Yield and Ultra Short go up and down completely randomly.
Pair Corralation between High Yield and Ultra Short
Assuming the 90 days horizon High Yield Fund is expected to generate 1.8 times more return on investment than Ultra Short. However, High Yield is 1.8 times more volatile than Ultra Short Income. It trades about 0.18 of its potential returns per unit of risk. Ultra Short Income is currently generating about 0.21 per unit of risk. If you would invest 324.00 in High Yield Fund on September 13, 2024 and sell it today you would earn a total of 4.00 from holding High Yield Fund or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
High Yield Fund vs. Ultra Short Income
Performance |
| Timeline |
| High Yield Fund |
| Ultra Short Income |
High Yield and Ultra Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Ultra Short
The main advantage of trading using opposite High Yield and Ultra Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Ultra Short 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 Ultra Short will offset losses from the drop in Ultra Short's long position.| High Yield vs. Aqr Managed Futures | High Yield vs. Guggenheim Managed Futures | High Yield vs. Arrow Managed Futures | High Yield vs. Guidepath Managed Futures |
| Ultra Short vs. Emerging Markets Equity | Ultra Short vs. Global Fixed Income | Ultra Short vs. Global Fixed Income | Ultra Short vs. Global Fixed Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |