Correlation Between Multimanager Lifestyle and Global Absolute
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Global Absolute 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 Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Balanced and Global Absolute Return, you can compare the effects of market volatilities on Multimanager Lifestyle and Global Absolute 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 Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Global Absolute.
Diversification Opportunities for Multimanager Lifestyle and Global Absolute
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multimanager and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Balance and Global Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Absolute Return 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 Balanced are associated (or correlated) with Global Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Absolute Return has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Global Absolute go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Global Absolute
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 1.09 times less return on investment than Global Absolute. In addition to that, Multimanager Lifestyle is 1.15 times more volatile than Global Absolute Return. It trades about 0.35 of its total potential returns per unit of risk. Global Absolute Return is currently generating about 0.44 per unit of volatility. If you would invest 1,052 in Global Absolute Return on September 5, 2024 and sell it today you would earn a total of 34.00 from holding Global Absolute Return or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Balance vs. Global Absolute Return
Performance |
| Timeline |
| Multimanager Lifestyle |
| Global Absolute Return |
Multimanager Lifestyle and Global Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Global Absolute
The main advantage of trading using opposite Multimanager Lifestyle and Global Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Global Absolute 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 Absolute will offset losses from the drop in Global Absolute's long position.The idea behind Multimanager Lifestyle Balanced and Global Absolute Return 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.
| Global Absolute vs. Regional Bank Fund | Global Absolute vs. Regional Bank Fund | Global Absolute vs. Multimanager Lifestyle Moderate | Global Absolute 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |