Correlation Between Total Bond and MLCX Biofuels

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

Diversification Opportunities for Total Bond and MLCX Biofuels

  Correlation Coefficient

Very good diversification

The 3 months correlation between Total and MLCX Biofuels is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Total Bond Market and MLCX Biofuels Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLCX Biofuels Index and Total Bond 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 Total Bond Market are associated (or correlated) with MLCX Biofuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLCX Biofuels Index has no effect on the direction of Total Bond i.e., Total Bond and MLCX Biofuels go up and down completely randomly.

Pair Corralation between Total Bond and MLCX Biofuels

Considering the 90-day investment horizon Total Bond Market is expected to under-perform the MLCX Biofuels. But the etf apears to be less risky and, when comparing its historical volatility, Total Bond Market is 1.72 times less risky than MLCX Biofuels. The etf trades about -0.17 of its potential returns per unit of risk. The MLCX Biofuels Index is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,136  in MLCX Biofuels Index on July 7, 2022 and sell it today you would earn a total of  7.00  from holding MLCX Biofuels Index or generate 0.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

Total Bond Market  vs.  MLCX Biofuels Index

 Performance (%) 
Total Bond Market 
Total Performance
0 of 100
Over the last 90 days Total Bond Market has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Total Bond is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Total Price Channel

MLCX Biofuels Index 
MLCX Biofuels Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in MLCX Biofuels Index are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MLCX Biofuels is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MLCX Biofuels Price Channel

Total Bond and MLCX Biofuels Volatility Contrast

   Predicted Return Density   

Pair Trading with Total Bond and MLCX Biofuels

The main advantage of trading using opposite Total Bond and MLCX Biofuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Bond position performs unexpectedly, MLCX Biofuels 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 MLCX Biofuels will offset losses from the drop in MLCX Biofuels' long position.
Total Bond vs. Intel Corp
The idea behind Total Bond Market and MLCX Biofuels Index 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.
MLCX Biofuels vs. Bank Of America
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

Other Complementary Tools

CEO Directory
Screen CEOs from public companies around the world
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Global Correlations
Find global opportunities by holding instruments from different markets
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes