Correlation Between Short Duration and Thompson Bond
Can any of the company-specific risk be diversified away by investing in both Short Duration and Thompson Bond 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 Short Duration and Thompson Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Income and Thompson Bond Fund, you can compare the effects of market volatilities on Short Duration and Thompson Bond 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 Short Duration with a short position of Thompson Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Thompson Bond.
Diversification Opportunities for Short Duration and Thompson Bond
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Short and Thompson is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Income and Thompson Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Bond and Short Duration 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 Short Duration Income are associated (or correlated) with Thompson Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Bond has no effect on the direction of Short Duration i.e., Short Duration and Thompson Bond go up and down completely randomly.
Pair Corralation between Short Duration and Thompson Bond
Assuming the 90 days horizon Short Duration is expected to generate 1.9 times less return on investment than Thompson Bond. In addition to that, Short Duration is 1.39 times more volatile than Thompson Bond Fund. It trades about 0.1 of its total potential returns per unit of risk. Thompson Bond Fund is currently generating about 0.26 per unit of volatility. If you would invest 1,038 in Thompson Bond Fund on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Thompson Bond Fund or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Income vs. Thompson Bond Fund
Performance |
| Timeline |
| Short Duration Income |
| Thompson Bond |
Short Duration and Thompson Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Thompson Bond
The main advantage of trading using opposite Short Duration and Thompson Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, Thompson Bond 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 Thompson Bond will offset losses from the drop in Thompson Bond's long position.| Short Duration vs. Champlain Mid Cap | Short Duration vs. Rational Defensive Growth | Short Duration vs. Growth Fund Of | Short Duration vs. Tfa Alphagen Growth |
| Thompson Bond vs. Tcw Total Return | Thompson Bond vs. Amg Yacktman Focused | Thompson Bond vs. Fidelity Advisor Floating | Thompson Bond vs. Doubleline Total Return |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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