Correlation Between Multimanager Lifestyle and Multi Index
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Multi Index 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 Multi Index 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 Multi Index 2015 Lifetime, you can compare the effects of market volatilities on Multimanager Lifestyle and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Multi Index.
Diversification Opportunities for Multimanager Lifestyle and Multi Index
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multimanager and Multi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Balance and Multi Index 2015 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2015 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2015 has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Multi Index go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Multi Index
Assuming the 90 days horizon Multimanager Lifestyle Balanced is expected to generate 1.41 times more return on investment than Multi Index. However, Multimanager Lifestyle is 1.41 times more volatile than Multi Index 2015 Lifetime. It trades about 0.1 of its potential returns per unit of risk. Multi Index 2015 Lifetime is currently generating about 0.1 per unit of risk. If you would invest 1,237 in Multimanager Lifestyle Balanced on August 25, 2024 and sell it today you would earn a total of 143.00 from holding Multimanager Lifestyle Balanced or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Balance vs. Multi Index 2015 Lifetime
Performance |
| Timeline |
| Multimanager Lifestyle |
| Multi Index 2015 |
Multimanager Lifestyle and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Multi Index
The main advantage of trading using opposite Multimanager Lifestyle and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Multi Index 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 Index will offset losses from the drop in Multi Index's long position.The idea behind Multimanager Lifestyle Balanced and Multi Index 2015 Lifetime 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.
| Multi Index vs. Regional Bank Fund | Multi Index vs. Regional Bank Fund | Multi Index vs. Multimanager Lifestyle Moderate | Multi Index 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |