Correlation Between Core Fixed and Asia Opportunity
Can any of the company-specific risk be diversified away by investing in both Core Fixed and Asia Opportunity 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 Core Fixed and Asia Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Fixed Income and Asia Opportunity Portfolio, you can compare the effects of market volatilities on Core Fixed and Asia Opportunity 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 Core Fixed with a short position of Asia Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Fixed and Asia Opportunity.
Diversification Opportunities for Core Fixed and Asia Opportunity
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Core and Asia is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Core Fixed Income and Asia Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Opportunity Por and Core 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 Core Fixed Income are associated (or correlated) with Asia Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Opportunity Por has no effect on the direction of Core Fixed i.e., Core Fixed and Asia Opportunity go up and down completely randomly.
Pair Corralation between Core Fixed and Asia Opportunity
Assuming the 90 days horizon Core Fixed is expected to generate 1.21 times less return on investment than Asia Opportunity. But when comparing it to its historical volatility, Core Fixed Income is 2.86 times less risky than Asia Opportunity. It trades about 0.03 of its potential returns per unit of risk. Asia Opportunity Portfolio is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,989 in Asia Opportunity Portfolio on August 31, 2024 and sell it today you would earn a total of 74.00 from holding Asia Opportunity Portfolio or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Fixed Income vs. Asia Opportunity Portfolio
Performance |
| Timeline |
| Core Fixed Income |
| Asia Opportunity Por |
Core Fixed and Asia Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Fixed and Asia Opportunity
The main advantage of trading using opposite Core Fixed and Asia Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Fixed position performs unexpectedly, Asia Opportunity 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 Asia Opportunity will offset losses from the drop in Asia Opportunity's long position.| Core Fixed vs. Fidelity Advisor Financial | Core Fixed vs. Icon Financial Fund | Core Fixed vs. Vanguard Financials Index | Core Fixed vs. Prudential Jennison Financial |
| Asia Opportunity vs. Western Asset Diversified | Asia Opportunity vs. American Century Diversified | Asia Opportunity vs. Principal Lifetime Hybrid | Asia Opportunity vs. Harbor Diversified International |
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.
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