Correlation Between Multisector Bond and Crow Point

Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Crow Point 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 Multisector Bond and Crow Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multisector Bond Sma and Crow Point Defined, you can compare the effects of market volatilities on Multisector Bond and Crow Point 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 Multisector Bond with a short position of Crow Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Crow Point.

Diversification Opportunities for Multisector Bond and Crow Point

0.92

Correlation Coefficient

Multisector Bond  Crow Point

Almost no diversification

The 3 months correlation between Multisector and Crow is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Crow Point Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crow Point Defined and Multisector 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 Multisector Bond Sma are associated (or correlated) with Crow Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crow Point Defined has no effect on the direction of Multisector Bond i.e., Multisector Bond and Crow Point go up and down completely randomly.

Pair Corralation between Multisector Bond and Crow Point

Assuming the 90 days horizon Multisector Bond is expected to generate 3.25 times less return on investment than Crow Point. But when comparing it to its historical volatility, Multisector Bond Sma is 2.38 times less risky than Crow Point. It trades about 0.19 of its potential returns per unit of risk. Crow Point Defined is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  924.00  in Crow Point Defined on May 2, 2025 and sell it today you would earn a total of  110.00  from holding Crow Point Defined or generate 11.9% return on investment over 90 days.

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

Multisector Bond Sma  vs.  Crow Point Defined

Multisector Bond Sma

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multisector Bond Sma are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multisector Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Crow Point Defined

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crow Point Defined are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Crow Point may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Multisector Bond and Crow Point

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

The idea behind Multisector Bond Sma and Crow Point Defined 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.