Correlation Between Commodities Strategy and Bridge Builder

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

By analyzing existing cross correlation between Commodities Strategy Fund and Bridge Builder E, you can compare the effects of market volatilities on Commodities Strategy and Bridge Builder 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 Commodities Strategy with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Bridge Builder.

Diversification Opportunities for Commodities Strategy and Bridge Builder

-0.3

Correlation Coefficient

Commodities Strategy  Bridge Builder

Very good diversification

The 3 months correlation between Commodities and Bridge is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Bridge Builder E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder E and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder E has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Bridge Builder go up and down completely randomly.

Pair Corralation between Commodities Strategy and Bridge Builder

Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Bridge Builder. In addition to that, Commodities Strategy is 2.39 times more volatile than Bridge Builder E. It trades about -0.12 of its total potential returns per unit of risk. Bridge Builder E is currently generating about 0.12 per unit of volatility. If you would invest  878.00  in Bridge Builder E on September 4, 2024 and sell it today you would earn a total of  8.00  from holding Bridge Builder E or generate 0.91% return on investment over 90 days.

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

Commodities Strategy Fund  vs.  Bridge Builder E

Commodities Strategy

Risk-Adjusted Performance

3 of 100

Insignificant

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

Bridge Builder E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Commodities Strategy and Bridge Builder

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

The idea behind Commodities Strategy Fund and Bridge Builder E 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.