Correlation Between Limited Duration and Strategic Enhanced
Can any of the company-specific risk be diversified away by investing in both Limited Duration and Strategic Enhanced 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 Limited Duration and Strategic Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Limited Duration Fund and Strategic Enhanced Yield, you can compare the effects of market volatilities on Limited Duration and Strategic Enhanced 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 Limited Duration with a short position of Strategic Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limited Duration and Strategic Enhanced.
Diversification Opportunities for Limited Duration and Strategic Enhanced
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Limited and Strategic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Limited Duration Fund and Strategic Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Enhanced Yield and Limited Duration 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 Limited Duration Fund are associated (or correlated) with Strategic Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Enhanced Yield has no effect on the direction of Limited Duration i.e., Limited Duration and Strategic Enhanced go up and down completely randomly.
Pair Corralation between Limited Duration and Strategic Enhanced
Assuming the 90 days horizon Limited Duration is expected to generate 6.46 times less return on investment than Strategic Enhanced. But when comparing it to its historical volatility, Limited Duration Fund is 1.57 times less risky than Strategic Enhanced. It trades about 0.03 of its potential returns per unit of risk. Strategic Enhanced Yield is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 888.00 in Strategic Enhanced Yield on June 6, 2025 and sell it today you would earn a total of 6.00 from holding Strategic Enhanced Yield or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Limited Duration Fund vs. Strategic Enhanced Yield
Performance |
| Timeline |
| Limited Duration |
| Strategic Enhanced Yield |
Limited Duration and Strategic Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Limited Duration and Strategic Enhanced
The main advantage of trading using opposite Limited Duration and Strategic Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limited Duration position performs unexpectedly, Strategic Enhanced 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 Strategic Enhanced will offset losses from the drop in Strategic Enhanced's long position.| Limited Duration vs. Ambrus Core Bond | Limited Duration vs. Pimco Global Bond | Limited Duration vs. T Rowe Price | Limited Duration vs. Ultra Short Fixed Income |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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