Correlation Between Applied Finance and Global Bond
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Global 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 Applied Finance and Global Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Global Bond Fund, you can compare the effects of market volatilities on Applied Finance and Global 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 Applied Finance with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Global Bond.
Diversification Opportunities for Applied Finance and Global Bond
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Applied and Global is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Applied Finance i.e., Applied Finance and Global Bond go up and down completely randomly.
Pair Corralation between Applied Finance and Global Bond
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Global Bond. In addition to that, Applied Finance is 6.94 times more volatile than Global Bond Fund. It trades about -0.04 of its total potential returns per unit of risk. Global Bond Fund is currently generating about -0.06 per unit of volatility. If you would invest 961.00 in Global Bond Fund on September 26, 2024 and sell it today you would lose (6.00) from holding Global Bond Fund or give up 0.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Applied Finance Explorer vs. Global Bond Fund
Performance |
Timeline |
Applied Finance Explorer |
Global Bond Fund |
Applied Finance and Global Bond Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Applied Finance and Global Bond
The main advantage of trading using opposite Applied Finance and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Global 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 Global Bond will offset losses from the drop in Global Bond's long position.Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
Global Bond vs. Royce Opportunity Fund | Global Bond vs. Applied Finance Explorer | Global Bond vs. Great West Loomis Sayles | Global Bond vs. Small Cap Value Fund |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |