Correlation Between Global Bond and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Global Bond and Metropolitan West 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 Bond and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Metropolitan West High, you can compare the effects of market volatilities on Global Bond and Metropolitan West 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 Bond with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Metropolitan West.
Diversification Opportunities for Global Bond and Metropolitan West
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Metropolitan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Metropolitan West High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West High and Global 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 Global Bond Fund are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West High has no effect on the direction of Global Bond i.e., Global Bond and Metropolitan West go up and down completely randomly.
Pair Corralation between Global Bond and Metropolitan West
Assuming the 90 days horizon Global Bond Fund is expected to generate 1.17 times more return on investment than Metropolitan West. However, Global Bond is 1.17 times more volatile than Metropolitan West High. It trades about 0.25 of its potential returns per unit of risk. Metropolitan West High is currently generating about 0.24 per unit of risk. If you would invest 956.00 in Global Bond Fund on June 12, 2025 and sell it today you would earn a total of 28.00 from holding Global Bond Fund or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Metropolitan West High
Performance |
| Timeline |
| Global Bond Fund |
| Metropolitan West High |
Global Bond and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Metropolitan West
The main advantage of trading using opposite Global Bond and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Global Bond vs. Vanguard Total International | Global Bond vs. Dfa Five Year Global | Global Bond vs. Morningstar Unconstrained Allocation | Global Bond vs. Thrivent High Yield |
| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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