Correlation Between Multimanager Lifestyle and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Floating Rate 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 Multimanager Lifestyle and Floating Rate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Aggressive and Floating Rate Income, you can compare the effects of market volatilities on Multimanager Lifestyle and Floating Rate 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 Multimanager Lifestyle with a short position of Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Floating Rate.
Diversification Opportunities for Multimanager Lifestyle and Floating Rate
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multimanager and Floating is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Floating Rate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate Income and Multimanager Lifestyle 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 Multimanager Lifestyle Aggressive are associated (or correlated) with Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate Income has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Floating Rate go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Floating Rate
Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 4.12 times more return on investment than Floating Rate. However, Multimanager Lifestyle is 4.12 times more volatile than Floating Rate Income. It trades about 0.07 of its potential returns per unit of risk. Floating Rate Income is currently generating about 0.21 per unit of risk. If you would invest 1,135 in Multimanager Lifestyle Aggressive on August 27, 2024 and sell it today you would earn a total of 390.00 from holding Multimanager Lifestyle Aggressive or generate 34.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Aggress vs. Floating Rate Income
Performance |
| Timeline |
| Multimanager Lifestyle |
| Floating Rate Income |
Multimanager Lifestyle and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Floating Rate
The main advantage of trading using opposite Multimanager Lifestyle and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.The idea behind Multimanager Lifestyle Aggressive and Floating Rate Income 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.
| Floating Rate vs. Regional Bank Fund | Floating Rate vs. Regional Bank Fund | Floating Rate vs. Multimanager Lifestyle Moderate | Floating Rate vs. Multimanager Lifestyle Balanced |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stocks Directory Find actively traded stocks across global markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |