Correlation Between Bond Fund and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Bond Fund and NYSE Composite 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 Bond Fund and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Bond and NYSE Composite, you can compare the effects of market volatilities on Bond Fund and NYSE Composite 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 Bond Fund with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and NYSE Composite.
Diversification Opportunities for Bond Fund and NYSE Composite
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bond and NYSE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Bond and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Bond 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 Bond Fund Bond are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Bond Fund i.e., Bond Fund and NYSE Composite go up and down completely randomly.
Pair Corralation between Bond Fund and NYSE Composite
Assuming the 90 days horizon Bond Fund Bond is expected to generate 0.5 times more return on investment than NYSE Composite. However, Bond Fund Bond is 2.0 times less risky than NYSE Composite. It trades about -0.15 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.22 per unit of risk. If you would invest 987.00 in Bond Fund Bond on January 31, 2024 and sell it today you would lose (11.00) from holding Bond Fund Bond or give up 1.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Bond Fund Bond vs. NYSE Composite
Performance |
Timeline |
Bond Fund and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Bond Fund Bond
Pair trading matchups for Bond Fund
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Bond Fund and NYSE Composite
The main advantage of trading using opposite Bond Fund and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Bond Fund vs. Manor Fund Manor | Bond Fund vs. Growth Fund Growth | Bond Fund vs. Vanguard Equity Income | Bond Fund vs. Fidelity 500 Index |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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