Correlation Between Intermediate Government and International Government
Can any of the company-specific risk be diversified away by investing in both Intermediate Government and International Government 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 Intermediate Government and International Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and International Government Bond, you can compare the effects of market volatilities on Intermediate Government and International Government 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 Intermediate Government with a short position of International Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and International Government.
Diversification Opportunities for Intermediate Government and International Government
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate and International is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond and International Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Government and Intermediate Government 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 Intermediate Government Bond are associated (or correlated) with International Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Government has no effect on the direction of Intermediate Government i.e., Intermediate Government and International Government go up and down completely randomly.
Pair Corralation between Intermediate Government and International Government
Assuming the 90 days horizon Intermediate Government Bond is expected to generate 0.34 times more return on investment than International Government. However, Intermediate Government Bond is 2.91 times less risky than International Government. It trades about 0.05 of its potential returns per unit of risk. International Government Bond is currently generating about -0.01 per unit of risk. If you would invest 956.00 in Intermediate Government Bond on June 4, 2025 and sell it today you would earn a total of 1.00 from holding Intermediate Government Bond or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. International Government Bond
Performance |
| Timeline |
| Intermediate Government |
| International Government |
Intermediate Government and International Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and International Government
The main advantage of trading using opposite Intermediate Government and International Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government position performs unexpectedly, International Government 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 International Government will offset losses from the drop in International Government's long position.| Intermediate Government vs. Gmo High Yield | Intermediate Government vs. Prudential High Yield | Intermediate Government vs. Lord Abbett Short | Intermediate Government vs. Multi Manager High Yield |
| International Government vs. L Abbett Growth | International Government vs. Growth Fund C | International Government vs. Aambahl Gaynor Income | International Government vs. T Rowe Price |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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