Correlation Between Bbh Intermediate and Inflation-linked

Can any of the company-specific risk be diversified away by investing in both Bbh Intermediate and Inflation-linked 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 Inflation-linked 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 Inflation Linked Fixed Income, you can compare the effects of market volatilities on Bbh Intermediate and Inflation-linked 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 Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and Inflation-linked.

Diversification Opportunities for Bbh Intermediate and Inflation-linked

0.82

Correlation Coefficient

Bbh Intermediate  Inflation-linked

Very poor diversification

The 3 months correlation between Bbh and Inflation-linked is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and Inflation Linked Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Linked Fixed 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 Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Linked Fixed has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and Inflation-linked go up and down completely randomly.

Pair Corralation between Bbh Intermediate and Inflation-linked

Assuming the 90 days horizon Bbh Intermediate is expected to generate 11.24 times less return on investment than Inflation-linked. But when comparing it to its historical volatility, Bbh Intermediate Municipal is 1.47 times less risky than Inflation-linked. It trades about 0.03 of its potential returns per unit of risk. Inflation Linked Fixed Income is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  805.00  in Inflation Linked Fixed Income on December 28, 2024 and sell it today you would earn a total of  28.00  from holding Inflation Linked Fixed Income or generate 3.48% return on investment over 90 days.

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

Bbh Intermediate Municipal  vs.  Inflation Linked Fixed Income

Bbh Intermediate Mun

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bbh Intermediate Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inflation Linked Fixed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inflation Linked Fixed Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Inflation-linked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bbh Intermediate and Inflation-linked

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

The idea behind Bbh Intermediate Municipal and Inflation Linked Fixed Income 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.