Correlation Between Active Bond and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Active Bond and Metropolitan West 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 Active Bond and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Active Bond Fund and Metropolitan West Total, you can compare the effects of market volatilities on Active Bond and Metropolitan West 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 Active Bond with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Bond and Metropolitan West.
Diversification Opportunities for Active Bond and Metropolitan West
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Active and Metropolitan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Active Bond Fund and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total and Active Bond 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 Active Bond Fund are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Active Bond i.e., Active Bond and Metropolitan West go up and down completely randomly.
Pair Corralation between Active Bond and Metropolitan West
Assuming the 90 days horizon Active Bond is expected to generate 1.63 times less return on investment than Metropolitan West. But when comparing it to its historical volatility, Active Bond Fund is 1.35 times less risky than Metropolitan West. It trades about 0.09 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 903.00 in Metropolitan West Total on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Metropolitan West Total or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Active Bond Fund vs. Metropolitan West Total
Performance |
| Timeline |
| Active Bond Fund |
| Metropolitan West Total |
Active Bond and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Bond and Metropolitan West
The main advantage of trading using opposite Active Bond and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Bond position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Active Bond vs. Transamerica Emerging Markets | Active Bond vs. Doubleline Emerging Markets | Active Bond vs. Siit Emerging Markets | Active Bond vs. Black Oak Emerging |
| Metropolitan West vs. Short Precious Metals | Metropolitan West vs. Goldman Sachs Esg | Metropolitan West vs. Gold And Precious | Metropolitan West vs. Vy Goldman Sachs |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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