Correlation Between Multimanager Lifestyle and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Energy Fund 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 Energy Fund 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 Energy Fund Class, you can compare the effects of market volatilities on Multimanager Lifestyle and Energy Fund 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 Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Energy Fund.
Diversification Opportunities for Multimanager Lifestyle and Energy Fund
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MULTIMANAGER and Energy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class 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 Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Energy Fund go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Energy Fund
Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 0.65 times more return on investment than Energy Fund. However, Multimanager Lifestyle Aggressive is 1.54 times less risky than Energy Fund. It trades about 0.09 of its potential returns per unit of risk. Energy Fund Class is currently generating about 0.02 per unit of risk. If you would invest 1,432 in Multimanager Lifestyle Aggressive on September 3, 2024 and sell it today you would earn a total of 125.00 from holding Multimanager Lifestyle Aggressive or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Aggress vs. Energy Fund Class
Performance |
| Timeline |
| Multimanager Lifestyle |
| Energy Fund Class |
Multimanager Lifestyle and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Energy Fund
The main advantage of trading using opposite Multimanager Lifestyle and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Multimanager Lifestyle vs. American Funds Growth | Multimanager Lifestyle vs. American Funds Growth | Multimanager Lifestyle vs. Franklin Mutual Shares | Multimanager Lifestyle vs. Franklin Mutual Shares |
| Energy Fund vs. Pace High Yield | Energy Fund vs. Metropolitan West High | Energy Fund vs. Ab High Income | Energy Fund vs. Multimanager Lifestyle Aggressive |
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 CEOs Directory module to screen CEOs from public companies around the world.
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