Correlation Between Short-intermediate and Scout Core
Can any of the company-specific risk be diversified away by investing in both Short-intermediate and Scout Core 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 Short-intermediate and Scout Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Intermediate Bond Fund and Scout E Bond, you can compare the effects of market volatilities on Short-intermediate and Scout Core 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 Short-intermediate with a short position of Scout Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-intermediate and Scout Core.
Diversification Opportunities for Short-intermediate and Scout Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Short-intermediate and Scout is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Short Intermediate Bond Fund and Scout E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout E Bond and Short-intermediate 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 Short Intermediate Bond Fund are associated (or correlated) with Scout Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout E Bond has no effect on the direction of Short-intermediate i.e., Short-intermediate and Scout Core go up and down completely randomly.
Pair Corralation between Short-intermediate and Scout Core
Assuming the 90 days horizon Short-intermediate is expected to generate 1.71 times less return on investment than Scout Core. But when comparing it to its historical volatility, Short Intermediate Bond Fund is 2.24 times less risky than Scout Core. It trades about 0.17 of its potential returns per unit of risk. Scout E Bond is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Scout E Bond on June 4, 2025 and sell it today you would earn a total of 24.00 from holding Scout E Bond or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Intermediate Bond Fund vs. Scout E Bond
Performance |
| Timeline |
| Short Intermediate Bond |
| Scout E Bond |
Short-intermediate and Scout Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-intermediate and Scout Core
The main advantage of trading using opposite Short-intermediate and Scout Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-intermediate position performs unexpectedly, Scout Core 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 Scout Core will offset losses from the drop in Scout Core's long position.The idea behind Short Intermediate Bond Fund and Scout E Bond 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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