Correlation Between Foreign Bond and Intel
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Intel 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 Foreign Bond and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Intel, you can compare the effects of market volatilities on Foreign Bond and Intel 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 Foreign Bond with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Intel.
Diversification Opportunities for Foreign Bond and Intel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Foreign and Intel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Foreign Bond 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 Foreign Bond Fund are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Foreign Bond i.e., Foreign Bond and Intel go up and down completely randomly.
Pair Corralation between Foreign Bond and Intel
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.12 times more return on investment than Intel. However, Foreign Bond Fund is 8.09 times less risky than Intel. It trades about -0.26 of its potential returns per unit of risk. Intel is currently generating about -0.35 per unit of risk. If you would invest 753.00 in Foreign Bond Fund on January 25, 2024 and sell it today you would lose (13.00) from holding Foreign Bond Fund or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Intel
Performance |
| Timeline |
| Foreign Bond |
| Intel |
Foreign Bond and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Intel
The main advantage of trading using opposite Foreign Bond and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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