Correlation Between Long Term and Long-Term Corp

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

Diversification Opportunities for Long Term and Long-Term Corp

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Long Term and Long-Term is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Bond and Long-Term Corp Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long-Term Corp Bond and Long Term 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 Long Term Bond are associated (or correlated) with Long-Term Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long-Term Corp Bond has no effect on the direction of Long Term i.e., Long Term and Long-Term Corp go up and down completely randomly.

Pair Corralation between Long Term and Long-Term Corp

If you would invest  0.00  in Long-Term Corp Bond on May 10, 2022 and sell it today you would earn a total of  0.00  from holding Long-Term Corp Bond or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy0.2%
ValuesDaily Returns

Long Term Bond  vs.  Long-Term Corp Bond

 Performance (%) 
       Timeline  
Long Term Bond 
Long Term Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Long Term Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Long Term is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Long Term Price Channel

Long-Term Corp Bond 
Long-Term Performance
0 of 100
Over the last 90 days Long-Term Corp Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Long-Term Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Long Term and Long-Term Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Long Term and Long-Term Corp

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

Long-Term Corp Bond

Pair trading matchups for Long-Term Corp

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Kennedy-Wilson Holdings vs. Long-Term Corp
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Vmware vs. Long-Term Corp
Walker Dunlop vs. Long-Term Corp
Alphabet vs. Long-Term Corp
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QK International vs. Long-Term Corp
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Long-Term Corp as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Long-Term Corp's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Long-Term Corp's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Long-Term Corp Bond.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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