Correlation Between International Fund and Intermediate Term

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both International Fund and Intermediate Term 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 International Fund and Intermediate Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fund International and Intermediate Term Bond Fund, you can compare the effects of market volatilities on International Fund and Intermediate Term 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 International Fund with a short position of Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Intermediate Term.

Diversification Opportunities for International Fund and Intermediate Term

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between International and Intermediate is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and International Fund 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 International Fund International are associated (or correlated) with Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of International Fund i.e., International Fund and Intermediate Term go up and down completely randomly.

Pair Corralation between International Fund and Intermediate Term

Assuming the 90 days horizon International Fund International is expected to generate 2.07 times more return on investment than Intermediate Term. However, International Fund is 2.07 times more volatile than Intermediate Term Bond Fund. It trades about 0.07 of its potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.05 per unit of risk. If you would invest  2,196  in International Fund International on September 5, 2024 and sell it today you would earn a total of  627.00  from holding International Fund International or generate 28.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

International Fund Internation  vs.  Intermediate Term Bond Fund

 Performance 
       Timeline  
International Fund 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days International Fund International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, International Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Intermediate Term Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Intermediate Term Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Intermediate Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Fund and Intermediate Term Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Fund and Intermediate Term

The main advantage of trading using opposite International Fund and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term's long position.
The idea behind International Fund International and Intermediate Term Bond Fund 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing