Correlation Between Intermediate Term and International Fund
Can any of the company-specific risk be diversified away by investing in both Intermediate Term and International Fund 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 Intermediate Term and International Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Term Bond Fund and International Fund International, you can compare the effects of market volatilities on Intermediate Term and International Fund 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 Intermediate Term with a short position of International Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Term and International Fund.
Diversification Opportunities for Intermediate Term and International Fund
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate and International is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and International Fund Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Fund and Intermediate Term 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 Intermediate Term Bond Fund are associated (or correlated) with International Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Fund has no effect on the direction of Intermediate Term i.e., Intermediate Term and International Fund go up and down completely randomly.
Pair Corralation between Intermediate Term and International Fund
Assuming the 90 days horizon Intermediate Term is expected to generate 2.47 times less return on investment than International Fund. But when comparing it to its historical volatility, Intermediate Term Bond Fund is 2.44 times less risky than International Fund. It trades about 0.04 of its potential returns per unit of risk. International Fund International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,588 in International Fund International on August 25, 2024 and sell it today you would earn a total of 172.00 from holding International Fund International or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Bond Fund vs. International Fund Internation
Performance |
| Timeline |
| Intermediate Term Bond |
| International Fund |
Intermediate Term and International Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Term and International Fund
The main advantage of trading using opposite Intermediate Term and International Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Term position performs unexpectedly, International Fund 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 International Fund will offset losses from the drop in International Fund's long position.| Intermediate Term vs. Capital Growth Fund | Intermediate Term vs. Emerging Markets Fund | Intermediate Term vs. High Income Fund | Intermediate Term vs. International Fund International |
| International Fund vs. Balanced Fund Retail | International Fund vs. Artisan Select Equity | International Fund vs. Small Cap Equity | International Fund vs. Gmo Global Equity |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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