Correlation Between Multimanager Lifestyle and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Lgm Risk 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 Lgm Risk 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 Lgm Risk Managed, you can compare the effects of market volatilities on Multimanager Lifestyle and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Lgm Risk.
Diversification Opportunities for Multimanager Lifestyle and Lgm Risk
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multimanager and Lgm is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Balance and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed 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 Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Lgm Risk go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Lgm Risk
Assuming the 90 days horizon Multimanager Lifestyle Balanced is expected to under-perform the Lgm Risk. In addition to that, Multimanager Lifestyle is 1.47 times more volatile than Lgm Risk Managed. It trades about -0.2 of its total potential returns per unit of risk. Lgm Risk Managed is currently generating about -0.14 per unit of volatility. If you would invest 1,147 in Lgm Risk Managed on September 24, 2024 and sell it today you would lose (12.00) from holding Lgm Risk Managed or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Multimanager Lifestyle Balance vs. Lgm Risk Managed
Performance |
| Timeline |
| Multimanager Lifestyle |
| Lgm Risk Managed |
Multimanager Lifestyle and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Lgm Risk
The main advantage of trading using opposite Multimanager Lifestyle and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Multimanager Lifestyle vs. John Hancock Bond | Multimanager Lifestyle vs. John Hancock Disciplined | Multimanager Lifestyle vs. Blue Chip Growth | Multimanager Lifestyle vs. John Hancock Income |
| Lgm Risk vs. American Balanced Fund | Lgm Risk vs. Qs Small Capitalization | Lgm Risk vs. Multimanager Lifestyle Balanced | Lgm Risk vs. Power Global Tactical |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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