Correlation Between Inflation Adjusted and Inflation-adjusted
Can any of the company-specific risk be diversified away by investing in both Inflation Adjusted and Inflation-adjusted 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 Inflation Adjusted and Inflation-adjusted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Adjusted Bond Fund and Inflation Adjusted Bond Fund, you can compare the effects of market volatilities on Inflation Adjusted and Inflation-adjusted 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 Inflation Adjusted with a short position of Inflation-adjusted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Adjusted and Inflation-adjusted.
Diversification Opportunities for Inflation Adjusted and Inflation-adjusted
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Inflation and Inflation-adjusted is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Adjusted Bond Fund and Inflation Adjusted Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Adjusted Bond and Inflation Adjusted 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 Inflation Adjusted Bond Fund are associated (or correlated) with Inflation-adjusted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Adjusted Bond has no effect on the direction of Inflation Adjusted i.e., Inflation Adjusted and Inflation-adjusted go up and down completely randomly.
Pair Corralation between Inflation Adjusted and Inflation-adjusted
Assuming the 90 days horizon Inflation Adjusted is expected to generate 1.0 times less return on investment than Inflation-adjusted. In addition to that, Inflation Adjusted is 1.07 times more volatile than Inflation Adjusted Bond Fund. It trades about 0.2 of its total potential returns per unit of risk. Inflation Adjusted Bond Fund is currently generating about 0.22 per unit of volatility. If you would invest 1,043 in Inflation Adjusted Bond Fund on June 2, 2025 and sell it today you would earn a total of 32.00 from holding Inflation Adjusted Bond Fund or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Adjusted Bond Fund vs. Inflation Adjusted Bond Fund
Performance |
| Timeline |
| Inflation Adjusted Bond |
| Inflation Adjusted Bond |
Inflation Adjusted and Inflation-adjusted Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Adjusted and Inflation-adjusted
The main advantage of trading using opposite Inflation Adjusted and Inflation-adjusted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Adjusted position performs unexpectedly, Inflation-adjusted 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 Inflation-adjusted will offset losses from the drop in Inflation-adjusted's long position.| Inflation Adjusted vs. L Abbett Growth | Inflation Adjusted vs. Old Westbury Large | Inflation Adjusted vs. Omni Small Cap Value | Inflation Adjusted vs. T Rowe Price |
| Inflation-adjusted vs. Mid Cap Value | Inflation-adjusted vs. Equity Growth Fund | Inflation-adjusted vs. Income Growth Fund | Inflation-adjusted vs. Diversified Bond Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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