Correlation Between Multimanager Lifestyle and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Investment Grade 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 Investment Grade 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 Investment Grade Porate, you can compare the effects of market volatilities on Multimanager Lifestyle and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Investment Grade.
Diversification Opportunities for Multimanager Lifestyle and Investment Grade
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MULTIMANAGER and Investment is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Investment Grade go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Investment Grade
Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 1.84 times more return on investment than Investment Grade. However, Multimanager Lifestyle is 1.84 times more volatile than Investment Grade Porate. It trades about 0.08 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.05 per unit of risk. If you would invest 1,154 in Multimanager Lifestyle Aggressive on September 4, 2024 and sell it today you would earn a total of 407.00 from holding Multimanager Lifestyle Aggressive or generate 35.27% 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. Investment Grade Porate
Performance |
| Timeline |
| Multimanager Lifestyle |
| Investment Grade Porate |
Multimanager Lifestyle and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Investment Grade
The main advantage of trading using opposite Multimanager Lifestyle and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Multimanager Lifestyle vs. Needham Aggressive Growth | Multimanager Lifestyle vs. Calvert High Yield | Multimanager Lifestyle vs. Siit High Yield | Multimanager Lifestyle vs. Victory High Income |
| Investment Grade vs. Victory High Income | Investment Grade vs. Multimanager Lifestyle Aggressive | Investment Grade vs. T Rowe Price | Investment Grade vs. Needham Aggressive Growth |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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