Correlation Between Bond Fund and Strategic Enhanced

Can any of the company-specific risk be diversified away by investing in both Bond Fund and Strategic Enhanced 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 Strategic Enhanced 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 Strategic Enhanced Yield, you can compare the effects of market volatilities on Bond Fund and Strategic Enhanced 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 Strategic Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Strategic Enhanced.

Diversification Opportunities for Bond Fund and Strategic Enhanced

0.99

Correlation Coefficient

Bond Fund  Strategic Enhanced

No risk reduction

The 3 months correlation between Bond and Strategic is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Investor and Strategic Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Enhanced Yield 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 Strategic Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Enhanced Yield has no effect on the direction of Bond Fund i.e., Bond Fund and Strategic Enhanced go up and down completely randomly.

Pair Corralation between Bond Fund and Strategic Enhanced

Assuming the 90 days horizon Bond Fund Investor is expected to under-perform the Strategic Enhanced. In addition to that, Bond Fund is 1.05 times more volatile than Strategic Enhanced Yield. It trades about -0.16 of its total potential returns per unit of risk. Strategic Enhanced Yield is currently generating about -0.16 per unit of volatility. If you would invest  893.00  in Strategic Enhanced Yield on September 17, 2024 and sell it today you would lose (25.00) from holding Strategic Enhanced Yield or give up 2.8% of portfolio value over 90 days.

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

Bond Fund Investor  vs.  Strategic Enhanced Yield

Bond Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bond Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. 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.

Strategic Enhanced Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Enhanced Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Strategic Enhanced 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 Strategic Enhanced

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

The idea behind Bond Fund Investor and Strategic Enhanced Yield 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.

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.