Correlation Between Multimanager Lifestyle and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Balanced Fund 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 Balanced Fund 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 Balanced Fund Class, you can compare the effects of market volatilities on Multimanager Lifestyle and Balanced Fund 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Balanced Fund.
Diversification Opportunities for Multimanager Lifestyle and Balanced Fund
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multimanager and Balanced is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Balance and Balanced Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Class 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Class has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Balanced Fund go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Balanced Fund
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 1.35 times less return on investment than Balanced Fund. But when comparing it to its historical volatility, Multimanager Lifestyle Balanced is 1.12 times less risky than Balanced Fund. It trades about 0.04 of its potential returns per unit of risk. Balanced Fund Class is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,921 in Balanced Fund Class on August 28, 2024 and sell it today you would earn a total of 23.00 from holding Balanced Fund Class or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Balance vs. Balanced Fund Class
Performance |
| Timeline |
| Multimanager Lifestyle |
| Balanced Fund Class |
Multimanager Lifestyle and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Balanced Fund
The main advantage of trading using opposite Multimanager Lifestyle and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.| Multimanager Lifestyle vs. The Gold Bullion | Multimanager Lifestyle vs. Ocm Mutual Fund | Multimanager Lifestyle vs. Wells Fargo Advantage | Multimanager Lifestyle vs. Wells Fargo Advantage |
| Balanced Fund vs. Regional Bank Fund | Balanced Fund vs. Regional Bank Fund | Balanced Fund vs. Multimanager Lifestyle Moderate | Balanced Fund vs. Multimanager Lifestyle Aggressive |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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