Correlation Between Foreign Bond and Stocksplus
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Stocksplus 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 Foreign Bond and Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Stocksplus Tr Short, you can compare the effects of market volatilities on Foreign Bond and Stocksplus 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 Foreign Bond with a short position of Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Stocksplus.
Diversification Opportunities for Foreign Bond and Stocksplus
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foreign and Stocksplus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Stocksplus Tr Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Tr Short and Foreign Bond 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 Foreign Bond Fund are associated (or correlated) with Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Tr Short has no effect on the direction of Foreign Bond i.e., Foreign Bond and Stocksplus go up and down completely randomly.
Pair Corralation between Foreign Bond and Stocksplus
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.61 times more return on investment than Stocksplus. However, Foreign Bond Fund is 1.65 times less risky than Stocksplus. It trades about 0.15 of its potential returns per unit of risk. Stocksplus Tr Short is currently generating about -0.07 per unit of risk. If you would invest 773.00 in Foreign Bond Fund on May 31, 2025 and sell it today you would earn a total of 12.00 from holding Foreign Bond Fund or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Stocksplus Tr Short
Performance |
| Timeline |
| Foreign Bond |
| Stocksplus Tr Short |
Foreign Bond and Stocksplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Stocksplus
The main advantage of trading using opposite Foreign Bond and Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Stocksplus 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 Stocksplus will offset losses from the drop in Stocksplus' long position.| Foreign Bond vs. Msift High Yield | Foreign Bond vs. Lord Abbett Short | Foreign Bond vs. Buffalo High Yield | Foreign Bond vs. Jpmorgan High Yield |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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