Correlation Between Bond Fund and Aston/herndon Large

Can any of the company-specific risk be diversified away by investing in both Bond Fund and Aston/herndon Large 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 Bond Fund and Aston/herndon Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bond Fund Investor and Astonherndon Large Cap, you can compare the effects of market volatilities on Bond Fund and Aston/herndon Large 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 Bond Fund with a short position of Aston/herndon Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Aston/herndon Large.

Diversification Opportunities for Bond Fund and Aston/herndon Large

-0.41

Correlation Coefficient

Bond Fund  Aston/herndon Large

Very good diversification

The 3 months correlation between Bond and Aston/herndon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Investor and Astonherndon Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astonherndon Large Cap and Bond Fund 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 Bond Fund Investor are associated (or correlated) with Aston/herndon Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astonherndon Large Cap has no effect on the direction of Bond Fund i.e., Bond Fund and Aston/herndon Large go up and down completely randomly.

Pair Corralation between Bond Fund and Aston/herndon Large

Assuming the 90 days horizon Bond Fund Investor is expected to generate 0.39 times more return on investment than Aston/herndon Large. However, Bond Fund Investor is 2.59 times less risky than Aston/herndon Large. It trades about 0.16 of its potential returns per unit of risk. Astonherndon Large Cap is currently generating about -0.06 per unit of risk. If you would invest  828.00  in Bond Fund Investor on December 23, 2024 and sell it today you would earn a total of  24.00  from holding Bond Fund Investor or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bond Fund Investor  vs.  Astonherndon Large Cap

Bond Fund Investor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bond Fund Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Astonherndon Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astonherndon Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aston/herndon Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bond Fund and Aston/herndon Large

The main advantage of trading using opposite Bond Fund and Aston/herndon Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, Aston/herndon Large 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 Aston/herndon Large will offset losses from the drop in Aston/herndon Large's long position.

The idea behind Bond Fund Investor and Astonherndon Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.