Correlation Between Multimanager Lifestyle and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Amer Beacon 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 Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Aggressive and Amer Beacon Garcia, you can compare the effects of market volatilities on Multimanager Lifestyle and Amer Beacon 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 Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Amer Beacon.
Diversification Opportunities for Multimanager Lifestyle and Amer Beacon
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Multimanager and Amer is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Aggressive are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Amer Beacon go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Amer Beacon
Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 1.57 times more return on investment than Amer Beacon. However, Multimanager Lifestyle is 1.57 times more volatile than Amer Beacon Garcia. It trades about 0.1 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.02 per unit of risk. If you would invest 1,295 in Multimanager Lifestyle Aggressive on September 12, 2024 and sell it today you would earn a total of 255.00 from holding Multimanager Lifestyle Aggressive or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Aggress vs. Amer Beacon Garcia
Performance |
| Timeline |
| Multimanager Lifestyle |
| Amer Beacon Garcia |
Multimanager Lifestyle and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Amer Beacon
The main advantage of trading using opposite Multimanager Lifestyle and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Amer Beacon 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.The idea behind Multimanager Lifestyle Aggressive and Amer Beacon Garcia 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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