Correlation Between Global Real and Short Duration
Can any of the company-specific risk be diversified away by investing in both Global Real and Short Duration 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 Global Real and Short Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and Short Duration Inflation, you can compare the effects of market volatilities on Global Real and Short Duration 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 Global Real with a short position of Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and Short Duration.
Diversification Opportunities for Global Real and Short Duration
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GLOBAL and Short is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Short Duration Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Inflation and Global Real 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 Global Real Estate are associated (or correlated) with Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Inflation has no effect on the direction of Global Real i.e., Global Real and Short Duration go up and down completely randomly.
Pair Corralation between Global Real and Short Duration
Assuming the 90 days horizon Global Real is expected to generate 1.16 times less return on investment than Short Duration. In addition to that, Global Real is 5.84 times more volatile than Short Duration Inflation. It trades about 0.05 of its total potential returns per unit of risk. Short Duration Inflation is currently generating about 0.35 per unit of volatility. If you would invest 1,050 in Short Duration Inflation on June 9, 2025 and sell it today you would earn a total of 28.00 from holding Short Duration Inflation or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Real Estate vs. Short Duration Inflation
Performance |
| Timeline |
| Global Real Estate |
| Short Duration Inflation |
Global Real and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Real and Short Duration
The main advantage of trading using opposite Global Real and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| Global Real vs. Wells Fargo Government | Global Real vs. Aig Government Money | Global Real vs. Payden Government Fund | Global Real vs. Franklin Adjustable Government |
| Short Duration vs. Mid Cap Value | Short Duration vs. Equity Growth Fund | Short Duration vs. Income Growth Fund | Short Duration 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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