Correlation Between Bbh Intermediate and International Equity
Can any of the company-specific risk be diversified away by investing in both Bbh Intermediate and International Equity 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 Bbh Intermediate and International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bbh Intermediate Municipal and International Equity Index, you can compare the effects of market volatilities on Bbh Intermediate and International Equity 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 Bbh Intermediate with a short position of International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and International Equity.
Diversification Opportunities for Bbh Intermediate and International Equity
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bbh and International is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and International Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Bbh Intermediate 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 Bbh Intermediate Municipal are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and International Equity go up and down completely randomly.
Pair Corralation between Bbh Intermediate and International Equity
Assuming the 90 days horizon Bbh Intermediate is expected to generate 2.85 times less return on investment than International Equity. But when comparing it to its historical volatility, Bbh Intermediate Municipal is 4.42 times less risky than International Equity. It trades about 0.09 of its potential returns per unit of risk. International Equity Index is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 950.00 in International Equity Index on September 20, 2024 and sell it today you would earn a total of 226.00 from holding International Equity Index or generate 23.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bbh Intermediate Municipal vs. International Equity Index
Performance |
Timeline |
Bbh Intermediate Mun |
International Equity |
Bbh Intermediate and International Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bbh Intermediate and International Equity
The main advantage of trading using opposite Bbh Intermediate and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bbh Intermediate position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.Bbh Intermediate vs. Small Cap Stock | Bbh Intermediate vs. Lord Abbett Diversified | Bbh Intermediate vs. Sentinel Small Pany | Bbh Intermediate vs. Aqr Diversified Arbitrage |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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