Correlation Between Us Government and High Yield
Can any of the company-specific risk be diversified away by investing in both Us Government and High Yield 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 Us Government and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and High Yield Portfolio, you can compare the effects of market volatilities on Us Government and High Yield 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 Us Government with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and High Yield.
Diversification Opportunities for Us Government and High Yield
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UGSDX and High is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Portfolio and Us Government 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 Us Government Securities are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Portfolio has no effect on the direction of Us Government i.e., Us Government and High Yield go up and down completely randomly.
Pair Corralation between Us Government and High Yield
If you would invest 852.00 in High Yield Portfolio on November 3, 2024 and sell it today you would earn a total of 8.00 from holding High Yield Portfolio or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. High Yield Portfolio
Performance |
| Timeline |
| Us Government Securities |
| High Yield Portfolio |
Us Government and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and High Yield
The main advantage of trading using opposite Us Government and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Us Government vs. Elfun Government Money | Us Government vs. Jpmorgan Government Bond | Us Government vs. John Hancock Government | Us Government vs. Blackrock Government Bond |
| High Yield vs. Msift High Yield | High Yield vs. City National Rochdale | High Yield vs. Strategic Advisers Income | High Yield vs. Virtus High Yield |
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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