Correlation Between Bondbloxx ETF and High Yield

Can any of the company-specific risk be diversified away by investing in both Bondbloxx ETF and High Yield 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 Bondbloxx ETF and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bondbloxx ETF Trust and High Yield Fund R6, you can compare the effects of market volatilities on Bondbloxx ETF and High Yield 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 Bondbloxx ETF with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and High Yield.

Diversification Opportunities for Bondbloxx ETF and High Yield

0.65

Correlation Coefficient

Bondbloxx ETF  High Yield

Poor diversification

The 3 months correlation between Bondbloxx and High is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and High Yield Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Bondbloxx ETF 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 Bondbloxx ETF Trust are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and High Yield go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and High Yield

Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 1.14 times less return on investment than High Yield. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 2.28 times less risky than High Yield. It trades about 0.34 of its potential returns per unit of risk. High Yield Fund R6 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  499.00  in High Yield Fund R6 on December 23, 2024 and sell it today you would earn a total of  10.00  from holding High Yield Fund R6 or generate 2.0% return on investment over 90 days.

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

Bondbloxx ETF Trust  vs.  High Yield Fund R6

Bondbloxx ETF Trust

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bondbloxx ETF Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

High Yield Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Fund R6 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bondbloxx ETF and High Yield

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

The idea behind Bondbloxx ETF Trust and High Yield Fund R6 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.