Correlation Between Intermediate-term and Target Managed
Can any of the company-specific risk be diversified away by investing in both Intermediate-term and Target Managed 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 Target Managed 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 Target Managed Allocation, you can compare the effects of market volatilities on Intermediate-term and Target Managed 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 Target Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Target Managed.
Diversification Opportunities for Intermediate-term and Target Managed
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Intermediate-term and Target is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and Target Managed Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Managed Allocation 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 Target Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Managed Allocation has no effect on the direction of Intermediate-term i.e., Intermediate-term and Target Managed go up and down completely randomly.
Pair Corralation between Intermediate-term and Target Managed
Assuming the 90 days horizon Intermediate-term is expected to generate 1.61 times less return on investment than Target Managed. But when comparing it to its historical volatility, Intermediate Term Bond Fund is 2.27 times less risky than Target Managed. It trades about 0.11 of its potential returns per unit of risk. Target Managed Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Target Managed Allocation on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Target Managed Allocation or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Bond Fund vs. Target Managed Allocation
Performance |
| Timeline |
| Intermediate Term Bond |
| Target Managed Allocation |
Intermediate-term and Target Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate-term and Target Managed
The main advantage of trading using opposite Intermediate-term and Target Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate-term position performs unexpectedly, Target Managed 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 Target Managed will offset losses from the drop in Target Managed's long position.| Intermediate-term vs. Metropolitan West Total | Intermediate-term vs. Metropolitan West Total | Intermediate-term vs. Pimco Total Return | Intermediate-term vs. Total Return Fund |
| Target Managed vs. All Asset Fund | Target Managed vs. Pimco All Asset | Target Managed vs. All Asset Fund | Target Managed vs. Pimco All Asset |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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