Correlation Between Total Return and Cb Large

Can any of the company-specific risk be diversified away by investing in both Total Return and Cb Large 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 Cb Large 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 Cb Large Cap, you can compare the effects of market volatilities on Total Return and Cb Large 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 Cb Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Cb Large.

Diversification Opportunities for Total Return and Cb Large

0.51

Correlation Coefficient

Total Return  Cb Large

Very weak diversification

The 3 months correlation between Total and CBLLX is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Bond and Cb Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cb Large Cap 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 Cb Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cb Large Cap has no effect on the direction of Total Return i.e., Total Return and Cb Large go up and down completely randomly.

Pair Corralation between Total Return and Cb Large

Assuming the 90 days horizon Total Return Bond is expected to generate 0.04 times more return on investment than Cb Large. However, Total Return Bond is 22.74 times less risky than Cb Large. It trades about -0.47 of its potential returns per unit of risk. Cb Large Cap is currently generating about -0.27 per unit of risk. If you would invest  1,113  in Total Return Bond on September 30, 2024 and sell it today you would lose (26.00) from holding Total Return Bond or give up 2.34% of portfolio value over 90 days.

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

Total Return Bond  vs.  Cb Large Cap

Total Return Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cb Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cb Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Total Return and Cb Large

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

The idea behind Total Return Bond and Cb Large Cap 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.