Correlation Between Inflation Protected and Us Government
Can any of the company-specific risk be diversified away by investing in both Inflation Protected and Us 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 Inflation Protected and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Us Government Securities, you can compare the effects of market volatilities on Inflation Protected and Us 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 Inflation Protected with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Us Government.
Diversification Opportunities for Inflation Protected and Us Government
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inflation and RGVCX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Inflation Protected 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 Protected Bond Fund are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Inflation Protected i.e., Inflation Protected and Us Government go up and down completely randomly.
Pair Corralation between Inflation Protected and Us Government
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 1.5 times more return on investment than Us Government. However, Inflation Protected is 1.5 times more volatile than Us Government Securities. It trades about 0.16 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.15 per unit of risk. If you would invest 1,063 in Inflation Protected Bond Fund on June 7, 2025 and sell it today you would earn a total of 12.00 from holding Inflation Protected Bond Fund or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Us Government Securities
Performance |
| Timeline |
| Inflation Protected |
| Us Government Securities |
Inflation Protected and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protected and Us Government
The main advantage of trading using opposite Inflation Protected and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protected position performs unexpectedly, Us 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 Us Government will offset losses from the drop in Us Government's long position.| Inflation Protected vs. Siit Emerging Markets | Inflation Protected vs. The Hartford Emerging | Inflation Protected vs. Franklin Emerging Market | Inflation Protected vs. Ep Emerging Markets |
| Us Government vs. Income Fund Of | Us Government vs. New World Fund | Us Government vs. American Mutual Fund | Us Government vs. American Mutual 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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