Correlation Between Multi-manager Directional and Multi Manager

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Multi-manager Directional and Multi Manager 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 Multi-manager Directional and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager Directional Alternative and Multi Manager Growth Strategies, you can compare the effects of market volatilities on Multi-manager Directional and Multi Manager 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 Multi-manager Directional with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager Directional and Multi Manager.

Diversification Opportunities for Multi-manager Directional and Multi Manager

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Multi-manager and Multi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte and Multi Manager Growth Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Growth and Multi-manager Directional 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 Multi Manager Directional Alternative are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Growth has no effect on the direction of Multi-manager Directional i.e., Multi-manager Directional and Multi Manager go up and down completely randomly.

Pair Corralation between Multi-manager Directional and Multi Manager

Assuming the 90 days horizon Multi Manager Directional Alternative is expected to generate 0.42 times more return on investment than Multi Manager. However, Multi Manager Directional Alternative is 2.36 times less risky than Multi Manager. It trades about 0.25 of its potential returns per unit of risk. Multi Manager Growth Strategies is currently generating about 0.04 per unit of risk. If you would invest  734.00  in Multi Manager Directional Alternative on October 20, 2024 and sell it today you would earn a total of  19.00  from holding Multi Manager Directional Alternative or generate 2.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.0%
ValuesDaily Returns

Multi Manager Directional Alte  vs.  Multi Manager Growth Strategie

 Performance 
       Timeline  
Multi-manager Directional 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Multi Manager Directional Alternative are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-manager Directional is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Multi Manager Growth 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Multi Manager Growth Strategies are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Multi Manager is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi-manager Directional and Multi Manager Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Multi-manager Directional and Multi Manager

The main advantage of trading using opposite Multi-manager Directional and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager Directional position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.
The idea behind Multi Manager Directional Alternative and Multi Manager Growth Strategies 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.
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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Stocks Directory
Find actively traded stocks across global markets
Global Correlations
Find global opportunities by holding instruments from different markets
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
FinTech Suite
Use AI to screen and filter profitable investment opportunities