Correlation Between Intermediate Term and Short-intermediate
Can any of the company-specific risk be diversified away by investing in both Intermediate Term and Short-intermediate 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 Short-intermediate 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 Short Intermediate Bond Fund, you can compare the effects of market volatilities on Intermediate Term and Short-intermediate 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 Short-intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Term and Short-intermediate.
Diversification Opportunities for Intermediate Term and Short-intermediate
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate and Short-intermediate is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and Short Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Intermediate Bond 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 Short-intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Intermediate Bond has no effect on the direction of Intermediate Term i.e., Intermediate Term and Short-intermediate go up and down completely randomly.
Pair Corralation between Intermediate Term and Short-intermediate
Assuming the 90 days horizon Intermediate Term Bond Fund is expected to generate 2.32 times more return on investment than Short-intermediate. However, Intermediate Term is 2.32 times more volatile than Short Intermediate Bond Fund. It trades about 0.11 of its potential returns per unit of risk. Short Intermediate Bond Fund is currently generating about 0.15 per unit of risk. If you would invest 877.00 in Intermediate Term Bond Fund on April 10, 2025 and sell it today you would earn a total of 38.00 from holding Intermediate Term Bond Fund or generate 4.33% 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. Short Intermediate Bond Fund
Performance |
| Timeline |
| Intermediate Term Bond |
| Short Intermediate Bond |
Intermediate Term and Short-intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Term and Short-intermediate
The main advantage of trading using opposite Intermediate Term and Short-intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Term position performs unexpectedly, Short-intermediate 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 Short-intermediate will offset losses from the drop in Short-intermediate's long position.| Intermediate Term vs. World Energy Fund | Intermediate Term vs. Dreyfus Natural Resources | Intermediate Term vs. Gmo Resources | Intermediate Term vs. Ivy Energy Fund |
| Short-intermediate vs. Mainstay Vertible Fund | Short-intermediate vs. Putnam Convertible Securities | Short-intermediate vs. Teton Vertible Securities | Short-intermediate vs. Putnam Vertible Securities |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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