Correlation Between Multimanager Lifestyle and Global Equity
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Global Equity 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 Global Equity 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 Global Equity Fund, you can compare the effects of market volatilities on Multimanager Lifestyle and Global Equity 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 Global Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Global Equity.
Diversification Opportunities for Multimanager Lifestyle and Global Equity
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multimanager and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Global Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Equity 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 Global Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Equity has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Global Equity go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Global Equity
Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 0.51 times more return on investment than Global Equity. However, Multimanager Lifestyle Aggressive is 1.97 times less risky than Global Equity. It trades about -0.01 of its potential returns per unit of risk. Global Equity Fund is currently generating about -0.13 per unit of risk. If you would invest 1,511 in Multimanager Lifestyle Aggressive on November 7, 2024 and sell it today you would lose (11.00) from holding Multimanager Lifestyle Aggressive or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Aggress vs. Global Equity Fund
Performance |
| Timeline |
| Multimanager Lifestyle |
| Global Equity |
Multimanager Lifestyle and Global Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Global Equity
The main advantage of trading using opposite Multimanager Lifestyle and Global Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Global Equity 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 Equity will offset losses from the drop in Global Equity's long position.| Multimanager Lifestyle vs. Enhanced Fixed Income | Multimanager Lifestyle vs. Nuveen Core Equity | Multimanager Lifestyle vs. Gmo Global Equity | Multimanager Lifestyle vs. Calvert International Equity |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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