Correlation Between Corporate Bond and Growth Portfolio

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

By analyzing existing cross correlation between Corporate Bond Portfolio and Growth Portfolio Class, you can compare the effects of market volatilities on Corporate Bond and Growth Portfolio 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 Corporate Bond with a short position of Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Bond and Growth Portfolio.

Diversification Opportunities for Corporate Bond and Growth Portfolio

0.0

Correlation Coefficient

Corporate Bond  Growth Portfolio

Pay attention - limited upside

The 3 months correlation between Corporate and Growth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Bond Portfolio and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class and Corporate 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 Corporate Bond Portfolio are associated (or correlated) with Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Corporate Bond i.e., Corporate Bond and Growth Portfolio go up and down completely randomly.

Pair Corralation between Corporate Bond and Growth Portfolio

If you would invest  3,686  in Growth Portfolio Class on September 12, 2024 and sell it today you would earn a total of  1,601  from holding Growth Portfolio Class or generate 43.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Corporate Bond Portfolio  vs.  Growth Portfolio Class

Corporate Bond Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporate Bond Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Corporate Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Portfolio Class

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Portfolio Class are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporate Bond and Growth Portfolio

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

The idea behind Corporate Bond Portfolio and Growth Portfolio Class 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 Commodity Directory module to find actively traded commodities issued by global exchanges.