Correlation Between Multi Index and Classic Value
Can any of the company-specific risk be diversified away by investing in both Multi Index 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 Multi Index and Classic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Index 2045 Lifetime and Classic Value Fund, you can compare the effects of market volatilities on Multi Index 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 Multi Index with a short position of Classic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Index and Classic Value.
Diversification Opportunities for Multi Index and Classic Value
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multi and Classic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2045 Lifetime and Classic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Classic Value and Multi Index 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 Multi Index 2045 Lifetime 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 Multi Index i.e., Multi Index and Classic Value go up and down completely randomly.
Pair Corralation between Multi Index and Classic Value
Assuming the 90 days horizon Multi Index 2045 Lifetime is expected to generate 0.93 times more return on investment than Classic Value. However, Multi Index 2045 Lifetime is 1.07 times less risky than Classic Value. It trades about 0.02 of its potential returns per unit of risk. Classic Value Fund is currently generating about -0.18 per unit of risk. If you would invest 1,456 in Multi Index 2045 Lifetime on November 28, 2024 and sell it today you would earn a total of 4.00 from holding Multi Index 2045 Lifetime or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Index 2045 Lifetime vs. Classic Value Fund
Performance |
| Timeline |
| Multi Index 2045 |
| Classic Value |
Multi Index and Classic Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Index and Classic Value
The main advantage of trading using opposite Multi Index and Classic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Index 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.| Multi Index vs. Transamerica Financial Life | Multi Index vs. Ultrasmall Cap Profund Ultrasmall Cap | Multi Index vs. Blackrock Smid Cap Growth | Multi Index vs. Fidelity Small Cap |
| Classic Value vs. Ep Emerging Markets | Classic Value vs. Goldman Sachs Small | Classic Value vs. Champlain Small | Classic Value vs. Ab Small Cap |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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