Correlation Between Bond Fund and Mesirow Enhanced

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

By analyzing existing cross correlation between Bond Fund Of and Mesirow Enhanced Core, you can compare the effects of market volatilities on Bond Fund and Mesirow 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 Mesirow Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Mesirow Enhanced.

Diversification Opportunities for Bond Fund and Mesirow Enhanced

0.88

Correlation Coefficient

Bond Fund  Mesirow Enhanced

Very poor diversification

The 3 months correlation between Bond and Mesirow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and Mesirow Enhanced Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Enhanced Core 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 Of are associated (or correlated) with Mesirow Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Enhanced Core has no effect on the direction of Bond Fund i.e., Bond Fund and Mesirow Enhanced go up and down completely randomly.

Pair Corralation between Bond Fund and Mesirow Enhanced

Assuming the 90 days horizon Bond Fund Of is expected to generate 1.06 times more return on investment than Mesirow Enhanced. However, Bond Fund is 1.06 times more volatile than Mesirow Enhanced Core. It trades about 0.05 of its potential returns per unit of risk. Mesirow Enhanced Core is currently generating about -0.04 per unit of risk. If you would invest  1,127  in Bond Fund Of on December 1, 2024 and sell it today you would earn a total of  10.00  from holding Bond Fund Of or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Bond Fund Of  vs.  Mesirow Enhanced Core

Bond Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bond Fund Of are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and 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.

Mesirow Enhanced Core

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Bond Fund Of and Mesirow Enhanced Core 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.