Correlation Between LED IBond and TOBA Investments

Can any of the company-specific risk be diversified away by investing in both LED IBond and TOBA Investments 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 LED IBond and TOBA Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LED iBond International and TOBA Investments Bonds, you can compare the effects of market volatilities on LED IBond and TOBA Investments 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 LED IBond with a short position of TOBA Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of LED IBond and TOBA Investments.

Diversification Opportunities for LED IBond and TOBA Investments

0.01

Correlation Coefficient

LED IBond  TOBA Investments

Significant diversification

The 3 months correlation between LED and TOBA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LED iBond International and TOBA Investments Bonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOBA Investments Bonds and LED IBond 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 LED iBond International are associated (or correlated) with TOBA Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOBA Investments Bonds has no effect on the direction of LED IBond i.e., LED IBond and TOBA Investments go up and down completely randomly.

Pair Corralation between LED IBond and TOBA Investments

Assuming the 90 days trading horizon LED iBond International is expected to generate 39.27 times more return on investment than TOBA Investments. However, LED IBond is 39.27 times more volatile than TOBA Investments Bonds. It trades about 0.04 of its potential returns per unit of risk. TOBA Investments Bonds is currently generating about 0.14 per unit of risk. If you would invest  26.00  in LED iBond International on April 23, 2025 and sell it today you would earn a total of  0.00  from holding LED iBond International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.34%
Values	Daily Returns

LED iBond International  vs.  TOBA Investments Bonds

LED iBond International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LED iBond International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, LED IBond displayed solid returns over the last few months and may actually be approaching a breakup point.

TOBA Investments Bonds

Risk-Adjusted Performance

OK

Over the last 90 days TOBA Investments Bonds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, TOBA Investments is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LED IBond and TOBA Investments

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

The idea behind LED iBond International and TOBA Investments Bonds 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..