Correlation Between Multimanager Lifestyle and Classic Value
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Classic Value 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 Classic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Moderate and Classic Value Fund, you can compare the effects of market volatilities on Multimanager Lifestyle and Classic Value 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 Classic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Classic Value.
Diversification Opportunities for Multimanager Lifestyle and Classic Value
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Multimanager and Classic is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Moderat and Classic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Classic Value 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 Moderate are associated (or correlated) with Classic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Classic Value has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Classic Value go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Classic Value
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 1.6 times less return on investment than Classic Value. But when comparing it to its historical volatility, Multimanager Lifestyle Moderate is 2.5 times less risky than Classic Value. It trades about 0.09 of its potential returns per unit of risk. Classic Value Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,937 in Classic Value Fund on August 30, 2024 and sell it today you would earn a total of 901.00 from holding Classic Value Fund or generate 30.68% 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 Moderat vs. Classic Value Fund
Performance |
| Timeline |
| Multimanager Lifestyle |
| Classic Value |
Multimanager Lifestyle and Classic Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Classic Value
The main advantage of trading using opposite Multimanager Lifestyle and Classic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Classic Value 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 Classic Value will offset losses from the drop in Classic Value's long position.The idea behind Multimanager Lifestyle Moderate and Classic Value Fund 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.
| Classic Value vs. Dodge Cox Stock | Classic Value vs. American Mutual Fund | Classic Value vs. American Funds American | Classic Value vs. American Funds American |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |