Correlation Between Intermediate-term and Global Technology
Can any of the company-specific risk be diversified away by investing in both Intermediate-term 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 Intermediate-term and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Term Bond Fund and Global Technology Portfolio, you can compare the effects of market volatilities on Intermediate-term 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 Intermediate-term with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Global Technology.
Diversification Opportunities for Intermediate-term and Global Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate-term and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Intermediate-term 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 Intermediate Term Bond Fund 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 Intermediate-term i.e., Intermediate-term and Global Technology go up and down completely randomly.
Pair Corralation between Intermediate-term and Global Technology
Assuming the 90 days horizon Intermediate-term is expected to generate 1.38 times less return on investment than Global Technology. But when comparing it to its historical volatility, Intermediate Term Bond Fund is 5.97 times less risky than Global Technology. It trades about 0.18 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,282 in Global Technology Portfolio on August 28, 2025 and sell it today you would earn a total of 62.00 from holding Global Technology Portfolio or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Bond Fund vs. Global Technology Portfolio
Performance |
| Timeline |
| Intermediate Term Bond |
| Global Technology |
Intermediate-term and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate-term and Global Technology
The main advantage of trading using opposite Intermediate-term and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate-term 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.| Intermediate-term vs. Elfun Government Money | Intermediate-term vs. Matson Money Equity | Intermediate-term vs. Blackrock Exchange Portfolio | Intermediate-term vs. Ab Government Exchange |
| Global Technology vs. T Rowe Price | Global Technology vs. Investec Global Franchise | Global Technology vs. Qs Global Equity | Global Technology vs. The Hartford World |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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