Correlation Between Rbb Fund and US Treasury

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

By analyzing existing cross correlation between Rbb Fund and US Treasury 30, you can compare the effects of market volatilities on Rbb Fund and US Treasury 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 Rbb Fund with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbb Fund and US Treasury.

Diversification Opportunities for Rbb Fund and US Treasury

0.99

Correlation Coefficient

Rbb Fund  US Treasury

No risk reduction

The 3 months correlation between Rbb and UTHY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Rbb Fund and US Treasury 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 30 and Rbb 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 Rbb Fund are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 30 has no effect on the direction of Rbb Fund i.e., Rbb Fund and US Treasury go up and down completely randomly.

Pair Corralation between Rbb Fund and US Treasury

Given the investment horizon of 90 days Rbb Fund is expected to generate 0.5 times more return on investment than US Treasury. However, Rbb Fund is 2.0 times less risky than US Treasury. It trades about -0.11 of its potential returns per unit of risk. US Treasury 30 is currently generating about -0.08 per unit of risk. If you would invest  4,518  in Rbb Fund on September 4, 2024 and sell it today you would lose (130.00) from holding Rbb Fund or give up 2.88% of portfolio value over 90 days.

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

Rbb Fund   vs.  US Treasury 30

Rbb Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbb Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Rbb Fund is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

US Treasury 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Treasury 30 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, US Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rbb Fund and US Treasury

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

The idea behind Rbb Fund and US Treasury 30 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.