Correlation Between Iaadx and Multi Asset
Can any of the company-specific risk be diversified away by investing in both Iaadx and Multi Asset 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 Iaadx and Multi Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iaadx and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Iaadx and Multi Asset 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 Iaadx with a short position of Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iaadx and Multi Asset.
Diversification Opportunities for Iaadx and Multi Asset
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Iaadx and Multi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Iaadx and Multi Asset Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Asset Growth and Iaadx 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 Iaadx are associated (or correlated) with Multi Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Asset Growth has no effect on the direction of Iaadx i.e., Iaadx and Multi Asset go up and down completely randomly.
Pair Corralation between Iaadx and Multi Asset
Assuming the 90 days horizon Iaadx is expected to generate 1.25 times less return on investment than Multi Asset. But when comparing it to its historical volatility, Iaadx is 1.56 times less risky than Multi Asset. It trades about 0.12 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Multi Asset Growth Strategy on September 14, 2024 and sell it today you would earn a total of 224.00 from holding Multi Asset Growth Strategy or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Iaadx vs. Multi Asset Growth Strategy
Performance |
| Timeline |
| Iaadx |
| Multi Asset Growth |
Iaadx and Multi Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iaadx and Multi Asset
The main advantage of trading using opposite Iaadx and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iaadx position performs unexpectedly, Multi Asset 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 Asset will offset losses from the drop in Multi Asset's long position.| Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Capital Growth |
| Multi Asset vs. Scharf Global Opportunity | Multi Asset vs. Iaadx | Multi Asset vs. Leggmason Partners Institutional | Multi Asset vs. Balanced Fund Investor |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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