Correlation Between Balanced Fund and Core Plus
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Core Plus 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 Balanced Fund and Core Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Balanced and Core Plus Income, you can compare the effects of market volatilities on Balanced Fund and Core Plus 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 Balanced Fund with a short position of Core Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Core Plus.
Diversification Opportunities for Balanced Fund and Core Plus
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and CORE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Balanced and Core Plus Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Income and Balanced 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 Balanced Fund Balanced are associated (or correlated) with Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Income has no effect on the direction of Balanced Fund i.e., Balanced Fund and Core Plus go up and down completely randomly.
Pair Corralation between Balanced Fund and Core Plus
Assuming the 90 days horizon Balanced Fund Balanced is expected to generate 1.1 times more return on investment than Core Plus. However, Balanced Fund is 1.1 times more volatile than Core Plus Income. It trades about 0.09 of its potential returns per unit of risk. Core Plus Income is currently generating about 0.07 per unit of risk. If you would invest 1,691 in Balanced Fund Balanced on August 29, 2024 and sell it today you would earn a total of 98.00 from holding Balanced Fund Balanced or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Balanced vs. Core Plus Income
Performance |
| Timeline |
| Balanced Fund Balanced |
| Core Plus Income |
Balanced Fund and Core Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Core Plus
The main advantage of trading using opposite Balanced Fund and Core Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Core Plus 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 Core Plus will offset losses from the drop in Core Plus' long position.| Balanced Fund vs. Vanguard Wellesley Income | Balanced Fund vs. HUMANA INC | Balanced Fund vs. Aquagold International | Balanced Fund vs. Barloworld Ltd ADR |
| Core Plus vs. Pimco Income Fund | Core Plus vs. HUMANA INC | Core Plus vs. Aquagold International | Core Plus vs. Barloworld Ltd ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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