Correlation Between Income Fund and Short-intermediate

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

By analyzing existing cross correlation between Income Fund Institutional and Short Intermediate Bond Fund, you can compare the effects of market volatilities on Income Fund and Short-intermediate 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 Income Fund with a short position of Short-intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Short-intermediate.

Diversification Opportunities for Income Fund and Short-intermediate

0.64

Correlation Coefficient

Income Fund  Short-intermediate

Poor diversification

The 3 months correlation between Income and Short-intermediate is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Institutional and Short Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Intermediate Bond and Income 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 Income Fund Institutional are associated (or correlated) with Short-intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Intermediate Bond has no effect on the direction of Income Fund i.e., Income Fund and Short-intermediate go up and down completely randomly.

Pair Corralation between Income Fund and Short-intermediate

Assuming the 90 days horizon Income Fund Institutional is expected to under-perform the Short-intermediate. In addition to that, Income Fund is 2.72 times more volatile than Short Intermediate Bond Fund. It trades about -0.07 of its total potential returns per unit of risk. Short Intermediate Bond Fund is currently generating about 0.05 per unit of volatility. If you would invest  905.00  in Short Intermediate Bond Fund on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Short Intermediate Bond Fund or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Income Fund Institutional  vs.  Short Intermediate Bond Fund

Income Fund Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

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

Short Intermediate Bond

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Short Intermediate Bond Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Income Fund and Short-intermediate

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

The idea behind Income Fund Institutional and Short Intermediate Bond Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.