Correlation Between Short Precious and Multisector Bond

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

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

Diversification Opportunities for Short Precious and Multisector Bond

-0.74

Correlation Coefficient

Short Precious  Multisector Bond

Pay attention - limited upside

The 3 months correlation between Short and Multisector is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma and Short Precious 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 Short Precious Metals are associated (or correlated) with Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Short Precious i.e., Short Precious and Multisector Bond go up and down completely randomly.

Pair Corralation between Short Precious and Multisector Bond

Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Multisector Bond. In addition to that, Short Precious is 7.59 times more volatile than Multisector Bond Sma. It trades about -0.06 of its total potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.18 per unit of volatility. If you would invest  1,358  in Multisector Bond Sma on April 30, 2025 and sell it today you would earn a total of  45.00  from holding Multisector Bond Sma or generate 3.31% return on investment over 90 days.

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

Short Precious Metals  vs.  Multisector Bond Sma

Short Precious Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Short Precious Metals has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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.

Pair Trading with Short Precious and Multisector Bond

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

The idea behind Short Precious Metals and Multisector Bond Sma 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.