Correlation Between World Energy and Bond Fund
Can any of the company-specific risk be diversified away by investing in both World Energy and Bond Fund 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 World Energy and Bond Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Bond Fund Class, you can compare the effects of market volatilities on World Energy and Bond Fund 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 World Energy with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Bond Fund.
Diversification Opportunities for World Energy and Bond Fund
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Bond is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Bond Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund Class and World Energy 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 World Energy Fund are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund Class has no effect on the direction of World Energy i.e., World Energy and Bond Fund go up and down completely randomly.
Pair Corralation between World Energy and Bond Fund
Assuming the 90 days horizon World Energy Fund is expected to under-perform the Bond Fund. In addition to that, World Energy is 4.05 times more volatile than Bond Fund Class. It trades about -0.24 of its total potential returns per unit of risk. Bond Fund Class is currently generating about 0.3 per unit of volatility. If you would invest 838.00 in Bond Fund Class on December 5, 2024 and sell it today you would earn a total of 19.00 from holding Bond Fund Class or generate 2.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
World Energy Fund vs. Bond Fund Class
Performance |
Timeline |
World Energy |
Bond Fund Class |
World Energy and Bond Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with World Energy and Bond Fund
The main advantage of trading using opposite World Energy and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Bond Fund 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 Bond Fund will offset losses from the drop in Bond Fund's long position.World Energy vs. Us Government Securities | World Energy vs. Vanguard Intermediate Term Government | World Energy vs. Us Government Securities | World Energy vs. Old Westbury Municipal |
Bond Fund vs. Wells Fargo Advantage | Bond Fund vs. Invesco Gold Special | Bond Fund vs. Oppenheimer Gold Special | Bond Fund vs. Investment Managers Series |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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