Correlation Between Select Fund and Global Bond
Can any of the company-specific risk be diversified away by investing in both Select Fund and Global Bond 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 Select Fund and Global Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund A and Global Bond Fund, you can compare the effects of market volatilities on Select Fund and Global Bond 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 Select Fund with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Global Bond.
Diversification Opportunities for Select Fund and Global Bond
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Global is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund A and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund and Select Fund 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 Select Fund A are associated (or correlated) with Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Select Fund i.e., Select Fund and Global Bond go up and down completely randomly.
Pair Corralation between Select Fund and Global Bond
Assuming the 90 days horizon Select Fund A is expected to generate 6.44 times more return on investment than Global Bond. However, Select Fund is 6.44 times more volatile than Global Bond Fund. It trades about 0.11 of its potential returns per unit of risk. Global Bond Fund is currently generating about -0.06 per unit of risk. If you would invest 11,516 in Select Fund A on August 24, 2024 and sell it today you would earn a total of 300.00 from holding Select Fund A or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund A vs. Global Bond Fund
Performance |
| Timeline |
| Select Fund A |
| Global Bond Fund |
Select Fund and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Global Bond
The main advantage of trading using opposite Select Fund and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Global Bond 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 Bond will offset losses from the drop in Global Bond's long position.| Select Fund vs. Ultra Fund A | Select Fund vs. International Growth Fund | Select Fund vs. Select Fund I | Select Fund vs. Growth Fund A |
| Global Bond vs. Vanguard Total International | Global Bond vs. Vanguard Total International | Global Bond vs. Vanguard Total International | Global Bond vs. Vanguard Total 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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