Correlation Between Bbh Intermediate and Low-duration Bond

Can any of the company-specific risk be diversified away by investing in both Bbh Intermediate and Low-duration 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 Bbh Intermediate and Low-duration Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bbh Intermediate Municipal and Low Duration Bond Investor, you can compare the effects of market volatilities on Bbh Intermediate and Low-duration 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 Bbh Intermediate with a short position of Low-duration Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and Low-duration Bond.

Diversification Opportunities for Bbh Intermediate and Low-duration Bond

0.49

Correlation Coefficient

Bbh Intermediate  Low-duration Bond

Very weak diversification

The 3 months correlation between Bbh and Low-duration is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and Low Duration Bond Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Low Duration Bond and Bbh Intermediate 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 Bbh Intermediate Municipal are associated (or correlated) with Low-duration Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Low Duration Bond has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and Low-duration Bond go up and down completely randomly.

Pair Corralation between Bbh Intermediate and Low-duration Bond

Assuming the 90 days horizon Bbh Intermediate Municipal is expected to under-perform the Low-duration Bond. But the mutual fund apears to be less risky and, when comparing its historical volatility, Bbh Intermediate Municipal is 1.29 times less risky than Low-duration Bond. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Low Duration Bond Investor is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,276  in Low Duration Bond Investor on January 24, 2024 and sell it today you would lose (4.00) from holding Low Duration Bond Investor or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bbh Intermediate Municipal  vs.  Low Duration Bond Investor

Bbh Intermediate Mun

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Intermediate Municipal are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Low Duration Bond

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Low Duration Bond Investor are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Low-duration Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bbh Intermediate and Low-duration Bond

The main advantage of trading using opposite Bbh Intermediate and Low-duration Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bbh Intermediate position performs unexpectedly, Low-duration 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 Low-duration Bond will offset losses from the drop in Low-duration Bond's long position.

The idea behind Bbh Intermediate Municipal and Low Duration Bond Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.