Correlation Between Strategic Enhanced and Bond Fund

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

By analyzing existing cross correlation between Strategic Enhanced Yield and Bond Fund Class, you can compare the effects of market volatilities on Strategic Enhanced and Bond Fund 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 Strategic Enhanced with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Enhanced and Bond Fund.

Diversification Opportunities for Strategic Enhanced and Bond Fund

0.97

Correlation Coefficient

Strategic Enhanced  Bond Fund

Almost no diversification

The 3 months correlation between Strategic and Bond is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Enhanced Yield and Bond Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund Class and Strategic Enhanced 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 Strategic Enhanced Yield are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund Class has no effect on the direction of Strategic Enhanced i.e., Strategic Enhanced and Bond Fund go up and down completely randomly.

Pair Corralation between Strategic Enhanced and Bond Fund

Assuming the 90 days horizon Strategic Enhanced Yield is expected to under-perform the Bond Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Strategic Enhanced Yield is 1.07 times less risky than Bond Fund. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Bond Fund Class is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  870.00  in Bond Fund Class on September 13, 2024 and sell it today you would lose (16.00) from holding Bond Fund Class or give up 1.84% of portfolio value over 90 days.

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

Strategic Enhanced Yield  vs.  Bond Fund Class

Strategic Enhanced Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Enhanced Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Strategic Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bond Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bond Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Enhanced and Bond Fund

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

The idea behind Strategic Enhanced Yield and Bond Fund Class 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.