Correlation Between Inflation Linked and Global Technology
Can any of the company-specific risk be diversified away by investing in both Inflation Linked and Global Technology 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 Linked and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Linked Fixed Income and Global Technology Portfolio, you can compare the effects of market volatilities on Inflation Linked and Global Technology 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 Linked with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Linked and Global Technology.
Diversification Opportunities for Inflation Linked and Global Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inflation and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Linked Fixed Income and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Inflation Linked 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 Linked Fixed Income are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Inflation Linked i.e., Inflation Linked and Global Technology go up and down completely randomly.
Pair Corralation between Inflation Linked and Global Technology
Assuming the 90 days horizon Inflation Linked is expected to generate 1.32 times less return on investment than Global Technology. But when comparing it to its historical volatility, Inflation Linked Fixed Income is 3.05 times less risky than Global Technology. It trades about 0.25 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,187 in Global Technology Portfolio on June 8, 2025 and sell it today you would earn a total of 82.00 from holding Global Technology Portfolio or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Linked Fixed Income vs. Global Technology Portfolio
Performance |
| Timeline |
| Inflation Linked Fixed |
| Global Technology |
Inflation Linked and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Linked and Global Technology
The main advantage of trading using opposite Inflation Linked and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Linked position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Inflation Linked vs. Growth Strategy Fund | Inflation Linked vs. Pace International Emerging | Inflation Linked vs. Western Assets Emerging | Inflation Linked vs. Doubleline Emerging Markets |
| Global Technology vs. Gabelli Global Financial | Global Technology vs. Financials Ultrasector Profund | Global Technology vs. Angel Oak Financial | Global Technology vs. Prudential Financial Services |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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