Correlation Between Us Government and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Us Government and Lifex Income 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 Lifex Income 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 Lifex Income, you can compare the effects of market volatilities on Us Government and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Lifex Income.
Diversification Opportunities for Us Government and Lifex Income
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between USGFX and Lifex is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Us Government i.e., Us Government and Lifex Income go up and down completely randomly.
Pair Corralation between Us Government and Lifex Income
Assuming the 90 days horizon Us Government is expected to generate 2.99 times less return on investment than Lifex Income. But when comparing it to its historical volatility, Us Government Securities is 1.34 times less risky than Lifex Income. It trades about 0.02 of its potential returns per unit of risk. Lifex Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,825 in Lifex Income on August 30, 2024 and sell it today you would earn a total of 101.00 from holding Lifex Income or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.45% |
| Values | Daily Returns |
Us Government Securities vs. Lifex Income
Performance |
| Timeline |
| Us Government Securities |
| Lifex Income |
Us Government and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Lifex Income
The main advantage of trading using opposite Us Government and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income's long position.| Us Government vs. Shelton Funds | Us Government vs. Artisan Thematic Fund | Us Government vs. Versatile Bond Portfolio | Us Government vs. Barings Active Short |
| Lifex Income vs. Blue Current Global | Lifex Income vs. Ab Global Bond | Lifex Income vs. Scharf Global Opportunity | Lifex Income vs. Commonwealth Global Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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