Correlation Between Multisector Bond and Kopernik Global

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

By analyzing existing cross correlation between Multisector Bond Sma and Kopernik Global All Cap, you can compare the effects of market volatilities on Multisector Bond and Kopernik Global 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 Multisector Bond with a short position of Kopernik Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Kopernik Global.

Diversification Opportunities for Multisector Bond and Kopernik Global

0.79

Correlation Coefficient

Multisector Bond  Kopernik Global

Poor diversification

The 3 months correlation between Multisector and Kopernik is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Kopernik Global All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik Global All and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Kopernik Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik Global All has no effect on the direction of Multisector Bond i.e., Multisector Bond and Kopernik Global go up and down completely randomly.

Pair Corralation between Multisector Bond and Kopernik Global

Assuming the 90 days horizon Multisector Bond is expected to generate 6.06 times less return on investment than Kopernik Global. But when comparing it to its historical volatility, Multisector Bond Sma is 3.31 times less risky than Kopernik Global. It trades about 0.16 of its potential returns per unit of risk. Kopernik Global All Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,103  in Kopernik Global All Cap on December 23, 2024 and sell it today you would earn a total of  162.00  from holding Kopernik Global All Cap or generate 14.69% return on investment over 90 days.

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

Multisector Bond Sma  vs.  Kopernik Global All Cap

Multisector Bond Sma

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multisector Bond Sma are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multisector Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kopernik Global All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kopernik Global All Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Kopernik Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multisector Bond and Kopernik Global

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

The idea behind Multisector Bond Sma and Kopernik Global All Cap 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.