Correlation Between International Investors and The Bond

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

By analyzing existing cross correlation between International Investors Gold and The Bond Fund, you can compare the effects of market volatilities on International Investors and The Bond 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 International Investors with a short position of The Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and The Bond.

Diversification Opportunities for International Investors and The Bond

0.78

Correlation Coefficient

International Investors  The Bond

Poor diversification

The 3 months correlation between International and The is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and The Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and International Investors 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 International Investors Gold are associated (or correlated) with The Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of International Investors i.e., International Investors and The Bond go up and down completely randomly.

Pair Corralation between International Investors and The Bond

Assuming the 90 days horizon International Investors Gold is expected to generate 5.31 times more return on investment than The Bond. However, International Investors is 5.31 times more volatile than The Bond Fund. It trades about 0.31 of its potential returns per unit of risk. The Bond Fund is currently generating about 0.12 per unit of risk. If you would invest  1,033  in International Investors Gold on December 30, 2024 and sell it today you would earn a total of  360.00  from holding International Investors Gold or generate 34.85% return on investment over 90 days.

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

International Investors Gold  vs.  The Bond Fund

International Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, International Investors showed solid returns over the last few months and may actually be approaching a breakup point.

Bond Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bond Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Investors and The Bond

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

The idea behind International Investors Gold and The Bond Fund 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.