When you run RRG<GO> on your Bloomberg terminal the RRG will be populated with equity sectors from a major equity index based on the region where you (or at least your terminal) are based.
However, Relative Rotation Graphs™ are not limited to visualize trends in relative strength for equities (sectors). They can also, very well, be used for universes in other asset classes as well as various asset classes against each other. Similar to visualizing the rotation of sectors around a common benchmark, RRG<GO> can be tailored to visualize the relative rotation of a number of asset classes around a benchmark in ONE picture that catches all movements.
Setting up a Relative Rotation Graph™ holding various asset classes requires a bit of preparation. First of all the ticker symbols to be used to represent the various asset classes need to be defined. Once the proper symbols have been selected they need to be put into a CIXB(asket).
For this example I have created a CIX basket holding Bloomberg indices for Global equities (BWORLD), REITs (BWREIT), Government bonds (BGSV), Corporate Bonds (BHYC), High Yield (BHYC) and Commodities (BCOM). See Screenshot-1.
The next thing we need is a benchmark. This can be any ticker symbol but as we are looking at various asset classes it may make sense to use a custom benchmark which you can also easily create using CIX<GO>. For this example I have created a ‘balanced’ benchmark that is 50/50 BWORLD Index for equities and BGSV Index for bonds. See the second screen-shot on how to create such a Custom Index using the free-form editor on CIX<GO>.
When both the CIXs have been created the only thing left is to run RRG<GO> and plot the universe. In order to do that the ‘Source’ (amber box top-left) needs to be changed to CIX. After selecting CIX as the source, the amber box ‘Name’ next to it will hold all CIXs that are present on your system, select the CIX basket we just created, in this case ‘Asset Classes’. Then type the ticker symbol of the Custom Index in the amber ‘Base’ box, in this case ‘.BAL-BB Index’ and hit <GO> to produce the RRG in the third screen-shot.
Hit me up via IB on your terminal if you have any questions or need help re-creating this RRG for Asset Classes.
Needless to say that you can of course tailor the CIX basket as well as the benchmark to your liking.
RRG discussion and support forum
This forum is dedicated to Relative Rotation Graphs and is your resource for all your questions, suggestions and feedback. We love to hear from you. The forum has several sub-categories. The FAQ is a closed forum where you can read answers to some most Frequently Asked Questions on RRG. RRG General is the area where you can post and get answers with regard to general RRQ questions or issues. RRG on partner systems is where you will find and can ask any questions specifically geared towards the implementations of RRG by our partners
- Julius de Kempenaer
- Friday, 29 May 2015