Correlation Between Core Bond and Pro-blend(r) Maximum

Can any of the company-specific risk be diversified away by investing in both Core Bond and Pro-blend(r) Maximum 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 Core Bond and Pro-blend(r) Maximum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Bond Series and Pro Blend Maximum Term, you can compare the effects of market volatilities on Core Bond and Pro-blend(r) Maximum 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 Core Bond with a short position of Pro-blend(r) Maximum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Bond and Pro-blend(r) Maximum.

Diversification Opportunities for Core Bond and Pro-blend(r) Maximum

-0.53

Correlation Coefficient

Core Bond  Pro-blend(r) Maximum

Excellent diversification

The 3 months correlation between Core and Pro-blend(r) is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Core Bond Series and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Maximum and Core 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 Core Bond Series are associated (or correlated) with Pro-blend(r) Maximum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Maximum has no effect on the direction of Core Bond i.e., Core Bond and Pro-blend(r) Maximum go up and down completely randomly.

Pair Corralation between Core Bond and Pro-blend(r) Maximum

Assuming the 90 days horizon Core Bond Series is expected to under-perform the Pro-blend(r) Maximum. In addition to that, Core Bond is 3.21 times more volatile than Pro Blend Maximum Term. It trades about -0.01 of its total potential returns per unit of risk. Pro Blend Maximum Term is currently generating about 0.15 per unit of volatility. If you would invest  2,630  in Pro Blend Maximum Term on September 5, 2024 and sell it today you would earn a total of  138.00  from holding Pro Blend Maximum Term or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Core Bond Series  vs.  Pro Blend Maximum Term

Core Bond Series

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pro-blend(r) Maximum

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Maximum Term are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pro-blend(r) Maximum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Bond and Pro-blend(r) Maximum

The main advantage of trading using opposite Core Bond and Pro-blend(r) Maximum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Bond position performs unexpectedly, Pro-blend(r) Maximum 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 Pro-blend(r) Maximum will offset losses from the drop in Pro-blend(r) Maximum's long position.

The idea behind Core Bond Series and Pro Blend Maximum Term 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.