Correlation Between Financial Industries and Multi-manager High
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Multi-manager High 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 Financial Industries and Multi-manager High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Multi Manager High Yield, you can compare the effects of market volatilities on Financial Industries and Multi-manager High 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 Financial Industries with a short position of Multi-manager High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Multi-manager High.
Diversification Opportunities for Financial Industries and Multi-manager High
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Financial and Multi-manager is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Multi-manager High. 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 High has no effect on the direction of Financial Industries i.e., Financial Industries and Multi-manager High go up and down completely randomly.
Pair Corralation between Financial Industries and Multi-manager High
Assuming the 90 days horizon Financial Industries Fund is expected to generate 7.51 times more return on investment than Multi-manager High. However, Financial Industries is 7.51 times more volatile than Multi Manager High Yield. It trades about 0.06 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.19 per unit of risk. If you would invest 1,614 in Financial Industries Fund on December 2, 2024 and sell it today you would earn a total of 290.00 from holding Financial Industries Fund or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Multi Manager High Yield
Performance |
| Timeline |
| Financial Industries |
| Multi Manager High |
Financial Industries and Multi-manager High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Multi-manager High
The main advantage of trading using opposite Financial Industries and Multi-manager High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Multi-manager High 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 High will offset losses from the drop in Multi-manager High's long position.| Financial Industries vs. Gabelli Global Financial | ||
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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