Correlation Between Total Return and Total Return

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

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

Diversification Opportunities for Total Return and Total Return

0.91

Correlation Coefficient

Total Return  Total Return

Almost no diversification

The 3 months correlation between Total and Total is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Bond and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond and Total Return 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 Total Return Bond are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Total Return i.e., Total Return and Total Return go up and down completely randomly.

Pair Corralation between Total Return and Total Return

Assuming the 90 days horizon Total Return is expected to generate 1.08 times less return on investment than Total Return. But when comparing it to its historical volatility, Total Return Bond is 1.03 times less risky than Total Return. It trades about 0.17 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Total Return Bond on September 12, 2024 and sell it today you would earn a total of  107.00  from holding Total Return Bond or generate 12.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.72%
Values	Daily Returns

Total Return Bond  vs.  Total Return Bond

Total Return Bond

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Bond are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Total Return Bond

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Bond are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Total Return and Total Return

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

The idea behind Total Return Bond and Total Return Bond 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.