Correlation Between High Yield and Overseas Series
Can any of the company-specific risk be diversified away by investing in both High Yield and Overseas Series 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 High Yield and Overseas Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Bond and Overseas Series Class, you can compare the effects of market volatilities on High Yield and Overseas Series 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 High Yield with a short position of Overseas Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Overseas Series.
Diversification Opportunities for High Yield and Overseas Series
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between High and Overseas is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Bond and Overseas Series Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Series Class and High Yield 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 High Yield Bond are associated (or correlated) with Overseas Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Series Class has no effect on the direction of High Yield i.e., High Yield and Overseas Series go up and down completely randomly.
Pair Corralation between High Yield and Overseas Series
Assuming the 90 days horizon High Yield is expected to generate 3.37 times less return on investment than Overseas Series. But when comparing it to its historical volatility, High Yield Bond is 4.38 times less risky than Overseas Series. It trades about 0.09 of its potential returns per unit of risk. Overseas Series Class is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,319 in Overseas Series Class on December 2, 2024 and sell it today you would earn a total of 110.00 from holding Overseas Series Class or generate 3.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
High Yield Bond vs. Overseas Series Class
Performance |
Timeline |
High Yield Bond |
Overseas Series Class |
High Yield and Overseas Series Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with High Yield and Overseas Series
The main advantage of trading using opposite High Yield and Overseas Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Overseas Series 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 Overseas Series will offset losses from the drop in Overseas Series' long position.High Yield vs. High Yield Bond | High Yield vs. Artisan High Income | High Yield vs. Tcw High Yield | High Yield vs. High Yield Strategy |
Overseas Series vs. Praxis Impact Bond | Overseas Series vs. Doubleline Total Return | Overseas Series vs. Nationwide Bond Index | Overseas Series vs. Ab Bond Inflation |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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