Correlation Between Global Equity and Global Multi
Can any of the company-specific risk be diversified away by investing in both Global Equity and Global Multi 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 Global Equity and Global Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Equity Fund and Global Multi Strategy Fund, you can compare the effects of market volatilities on Global Equity and Global Multi 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 Global Equity with a short position of Global Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Equity and Global Multi.
Diversification Opportunities for Global Equity and Global Multi
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global Equity Fund and Global Multi Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Multi Strategy and Global Equity 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 Global Equity Fund are associated (or correlated) with Global Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Multi Strategy has no effect on the direction of Global Equity i.e., Global Equity and Global Multi go up and down completely randomly.
Pair Corralation between Global Equity and Global Multi
Assuming the 90 days horizon Global Equity Fund is expected to generate 2.76 times more return on investment than Global Multi. However, Global Equity is 2.76 times more volatile than Global Multi Strategy Fund. It trades about 0.1 of its potential returns per unit of risk. Global Multi Strategy Fund is currently generating about 0.13 per unit of risk. If you would invest 1,003 in Global Equity Fund on September 12, 2024 and sell it today you would earn a total of 372.00 from holding Global Equity Fund or generate 37.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Equity Fund vs. Global Multi Strategy Fund
Performance |
| Timeline |
| Global Equity |
| Global Multi Strategy |
Global Equity and Global Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Equity and Global Multi
The main advantage of trading using opposite Global Equity and Global Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Equity position performs unexpectedly, Global Multi 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 Global Multi will offset losses from the drop in Global Multi's long position.| Global Equity vs. Dodge Global Stock | Global Equity vs. Franklin Mutual Global | Global Equity vs. T Rowe Price | Global Equity vs. HUMANA INC |
| Global Multi vs. Global Advantage Portfolio | Global Multi vs. Global Strategist Portfolio | Global Multi vs. Global Strategist Portfolio | Global Multi vs. Global Equity Fund |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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