Correlation Between Investment Quality and Mirova Global

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

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

Diversification Opportunities for Investment Quality and Mirova Global

0.38

Correlation Coefficient

Investment Quality  Mirova Global

Weak diversification

The 3 months correlation between Investment and Mirova is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Investment Quality Bond and Mirova Global Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirova Global Green and Investment Quality 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 Investment Quality Bond are associated (or correlated) with Mirova Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirova Global Green has no effect on the direction of Investment Quality i.e., Investment Quality and Mirova Global go up and down completely randomly.

Pair Corralation between Investment Quality and Mirova Global

Assuming the 90 days horizon Investment Quality Bond is expected to generate 0.84 times more return on investment than Mirova Global. However, Investment Quality Bond is 1.2 times less risky than Mirova Global. It trades about 0.13 of its potential returns per unit of risk. Mirova Global Green is currently generating about 0.0 per unit of risk. If you would invest  922.00  in Investment Quality Bond on December 30, 2024 and sell it today you would earn a total of  18.00  from holding Investment Quality Bond or generate 1.95% return on investment over 90 days.

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

Investment Quality Bond  vs.  Mirova Global Green

Investment Quality Bond

Risk-Adjusted Performance

OK

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

Mirova Global Green

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Investment Quality and Mirova Global

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

The idea behind Investment Quality Bond and Mirova Global Green 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.