Correlation Between International Fund and Intermediate-term
Can any of the company-specific risk be diversified away by investing in both International Fund and Intermediate-term 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 Fund and Intermediate-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fund International and Intermediate Term Bond Fund, you can compare the effects of market volatilities on International Fund and Intermediate-term 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 Fund with a short position of Intermediate-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Intermediate-term.
Diversification Opportunities for International Fund and Intermediate-term
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Intermediate-term is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and International 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 International Fund International are associated (or correlated) with Intermediate-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of International Fund i.e., International Fund and Intermediate-term go up and down completely randomly.
Pair Corralation between International Fund and Intermediate-term
Assuming the 90 days horizon International Fund International is expected to under-perform the Intermediate-term. In addition to that, International Fund is 2.0 times more volatile than Intermediate Term Bond Fund. It trades about -0.11 of its total potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.11 per unit of volatility. If you would invest 914.00 in Intermediate Term Bond Fund on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Intermediate Term Bond Fund or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fund Internation vs. Intermediate Term Bond Fund
Performance |
| Timeline |
| International Fund |
| Intermediate Term Bond |
International Fund and Intermediate-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fund and Intermediate-term
The main advantage of trading using opposite International Fund and Intermediate-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund position performs unexpectedly, Intermediate-term 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 Intermediate-term will offset losses from the drop in Intermediate-term's long position.| International Fund vs. Multimedia Portfolio Multimedia | International Fund vs. Calamos Global Equity | International Fund vs. The Gabelli Equity | International Fund vs. Locorr Dynamic Equity |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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