Correlation Between Balanced Strategy and Global Real
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy and Global Real 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 Balanced Strategy and Global Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Global Real Estate, you can compare the effects of market volatilities on Balanced Strategy and Global Real 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 Balanced Strategy with a short position of Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Global Real.
Diversification Opportunities for Balanced Strategy and Global Real
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Balanced and Global is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate and Balanced Strategy 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 Balanced Strategy Fund are associated (or correlated) with Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Global Real go up and down completely randomly.
Pair Corralation between Balanced Strategy and Global Real
Assuming the 90 days horizon Balanced Strategy Fund is expected to generate 0.53 times more return on investment than Global Real. However, Balanced Strategy Fund is 1.87 times less risky than Global Real. It trades about 0.09 of its potential returns per unit of risk. Global Real Estate is currently generating about 0.02 per unit of risk. If you would invest 863.00 in Balanced Strategy Fund on September 26, 2024 and sell it today you would earn a total of 216.00 from holding Balanced Strategy Fund or generate 25.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Balanced Strategy Fund vs. Global Real Estate
Performance |
Timeline |
Balanced Strategy |
Global Real Estate |
Balanced Strategy and Global Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Balanced Strategy and Global Real
The main advantage of trading using opposite Balanced Strategy and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.Balanced Strategy vs. International Developed Markets | Balanced Strategy vs. Global Real Estate | Balanced Strategy vs. Global Real Estate | Balanced Strategy vs. Global Real Estate |
Global Real vs. International Developed Markets | Global Real vs. Global Real Estate | Global Real vs. Global Real Estate | Global Real vs. Growth Strategy Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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