Correlation Between International Fixed and International Stock
Can any of the company-specific risk be diversified away by investing in both International Fixed and International Stock 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 International Fixed and International Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fixed Income and International Stock Fund, you can compare the effects of market volatilities on International Fixed and International Stock 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 International Fixed with a short position of International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fixed and International Stock.
Diversification Opportunities for International Fixed and International Stock
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between INTERNATIONAL and INTERNATIONAL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Fixed Income and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock and International Fixed 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 International Fixed Income are associated (or correlated) with International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of International Fixed i.e., International Fixed and International Stock go up and down completely randomly.
Pair Corralation between International Fixed and International Stock
Assuming the 90 days horizon International Fixed Income is expected to generate 0.2 times more return on investment than International Stock. However, International Fixed Income is 4.89 times less risky than International Stock. It trades about 0.44 of its potential returns per unit of risk. International Stock Fund is currently generating about -0.09 per unit of risk. If you would invest 680.00 in International Fixed Income on September 2, 2024 and sell it today you would earn a total of 12.00 from holding International Fixed Income or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fixed Income vs. International Stock Fund
Performance |
| Timeline |
| International Fixed |
| International Stock |
International Fixed and International Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fixed and International Stock
The main advantage of trading using opposite International Fixed and International Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fixed position performs unexpectedly, International Stock 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 International Stock will offset losses from the drop in International Stock's long position.| International Fixed vs. Aqr Managed Futures | International Fixed vs. Aqr Managed Futures | International Fixed vs. Fidelity Advisor 529 | International Fixed vs. Cref Inflation Linked Bond |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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