Correlation Between Bond Fund and Bond Fund

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

Diversification Opportunities for Bond Fund and Bond Fund

1.0
  Correlation Coefficient

No risk reduction

The 21 months correlation between CFACX and BFAFX is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding The Bond Fund and The Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and Bond 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 The Bond Fund are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Bond Fund i.e., Bond Fund and Bond Fund go up and down completely randomly.

Pair Corralation between Bond Fund and Bond Fund

Assuming the 90 days horizon The Bond Fund is expected to generate about the same return on investment as The Bond Fund. But, The Bond Fund is 1.01 times less risky than Bond Fund. It trades about 0.16 of its potential returns per unit of risk. The Bond Fund is currently generating about 0.16 per unit of risk. If you would invest  1,186  in The Bond Fund on May 17, 2022 and sell it today you would earn a total of  18.00  from holding The Bond Fund or generate 1.52% return on investment over 90 days.
Time Period21 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

The Bond Fund  vs.  The Bond Fund

 Performance (%) 
       Timeline  
Bond Fund 
CFACX Performance
0 of 100
Over the last 90 days The Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CFACX Price Channel

Bond Fund 
BFAFX Performance
0 of 100
Over the last 90 days The Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BFAFX Price Channel

Bond Fund and Bond Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bond Fund and Bond Fund

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

The Bond Fund

Pair trading matchups for Bond Fund

Skyworks Solutions vs. Bond Fund
Qualcomm vs. Bond Fund
Dupont Denemours vs. Bond Fund
Visa vs. Bond Fund
Vmware vs. Bond Fund
Oracle vs. Bond Fund
Equinix vs. Bond Fund
Amazon vs. Bond Fund
Graphic Packaging vs. Bond Fund
Boeing vs. Bond Fund
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 Bond Fund 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. Bond Fund'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, Bond Fund'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 The Bond Fund.
The idea behind The Bond Fund and The 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.

The Bond Fund

Pair trading matchups for Bond Fund

Salesforce vs. Bond Fund
Oracle vs. Bond Fund
Equinix vs. Bond Fund
Wex vs. Bond Fund
Walker Dunlop vs. Bond Fund
Vmware vs. Bond Fund
Visa vs. Bond Fund
Skyworks Solutions vs. Bond Fund
Dupont Denemours vs. Bond Fund
Tenneco Automotive vs. Bond Fund
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 Bond Fund 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. Bond Fund'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, Bond Fund'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 The Bond Fund.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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