Correlation Between Investment Grade and All Asset
Can any of the company-specific risk be diversified away by investing in both Investment Grade and All Asset 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 Investment Grade and All Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Grade Porate and All Asset Fund, you can compare the effects of market volatilities on Investment Grade and All Asset 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 Investment Grade with a short position of All Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Grade and All Asset.
Diversification Opportunities for Investment Grade and All Asset
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investment and All is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Investment Grade Porate and All Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Asset Fund and Investment Grade 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 Investment Grade Porate are associated (or correlated) with All Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Asset Fund has no effect on the direction of Investment Grade i.e., Investment Grade and All Asset go up and down completely randomly.
Pair Corralation between Investment Grade and All Asset
Assuming the 90 days horizon Investment Grade is expected to generate 2.94 times less return on investment than All Asset. But when comparing it to its historical volatility, Investment Grade Porate is 1.43 times less risky than All Asset. It trades about 0.07 of its potential returns per unit of risk. All Asset Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,155 in All Asset Fund on September 9, 2025 and sell it today you would earn a total of 34.00 from holding All Asset Fund or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment Grade Porate vs. All Asset Fund
Performance |
| Timeline |
| Investment Grade Porate |
| All Asset Fund |
Investment Grade and All Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment Grade and All Asset
The main advantage of trading using opposite Investment Grade and All Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Grade position performs unexpectedly, All Asset 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 All Asset will offset losses from the drop in All Asset's long position.| Investment Grade vs. Fidelity Sai Convertible | Investment Grade vs. Lord Abbett Convertible | Investment Grade vs. Allianzgi Convertible Income | Investment Grade vs. Rationalpier 88 Convertible |
| All Asset vs. Blackrock Emerging Markets | All Asset vs. Rbc Emerging Markets | All Asset vs. Siit Emerging Markets | All Asset vs. Dws Emerging Markets |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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