Correlation Between General Money and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both General Money and Multimanager Lifestyle 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 General Money and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Multimanager Lifestyle Moderate, you can compare the effects of market volatilities on General Money and Multimanager Lifestyle 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 General Money with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Multimanager Lifestyle.
Diversification Opportunities for General Money and Multimanager Lifestyle
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between General and Multimanager is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Multimanager Lifestyle Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and General Money 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 General Money Market are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of General Money i.e., General Money and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between General Money and Multimanager Lifestyle
Assuming the 90 days horizon General Money is expected to generate 1.75 times less return on investment than Multimanager Lifestyle. In addition to that, General Money is 2.11 times more volatile than Multimanager Lifestyle Moderate. It trades about 0.02 of its total potential returns per unit of risk. Multimanager Lifestyle Moderate is currently generating about 0.09 per unit of volatility. If you would invest 1,058 in Multimanager Lifestyle Moderate on August 27, 2024 and sell it today you would earn a total of 197.00 from holding Multimanager Lifestyle Moderate or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
General Money Market vs. Multimanager Lifestyle Moderat
Performance |
| Timeline |
| General Money Market |
| Multimanager Lifestyle |
General Money and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Multimanager Lifestyle
The main advantage of trading using opposite General Money and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| General Money vs. Volumetric Fund Volumetric | General Money vs. Rbb Fund | General Money vs. Eic Value Fund | General Money vs. Blackrock Sm Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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