Correlation Between Multimanager Lifestyle and Us Global
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Us Global 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 Us Global 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 Us Global Leaders, you can compare the effects of market volatilities on Multimanager Lifestyle and Us Global 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 Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Us Global.
Diversification Opportunities for Multimanager Lifestyle and Us Global
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Multimanager and USGLX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Moderat and Us Global Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Leaders 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 Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Leaders has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Us Global go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Us Global
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 3.42 times less return on investment than Us Global. But when comparing it to its historical volatility, Multimanager Lifestyle Moderate is 2.9 times less risky than Us Global. It trades about 0.15 of its potential returns per unit of risk. Us Global Leaders is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,297 in Us Global Leaders on August 27, 2024 and sell it today you would earn a total of 259.00 from holding Us Global Leaders or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Moderat vs. Us Global Leaders
Performance |
| Timeline |
| Multimanager Lifestyle |
| Us Global Leaders |
Multimanager Lifestyle and Us Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Us Global
The main advantage of trading using opposite Multimanager Lifestyle and Us Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Us Global 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 Us Global will offset losses from the drop in Us Global's long position.The idea behind Multimanager Lifestyle Moderate and Us Global Leaders 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.
| Us Global vs. Regional Bank Fund | Us Global vs. Regional Bank Fund | Us Global vs. Multimanager Lifestyle Moderate | Us Global 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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