Correlation Between Multimanager Lifestyle and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Growth 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 Growth 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 Growth Fund C, you can compare the effects of market volatilities on Multimanager Lifestyle and Growth 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Growth Fund.
Diversification Opportunities for Multimanager Lifestyle and Growth Fund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MULTIMANAGER and Growth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Growth Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund C 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund C has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Growth Fund go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Growth Fund
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 1.31 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Multimanager Lifestyle Aggressive is 1.5 times less risky than Growth Fund. It trades about 0.32 of its potential returns per unit of risk. Growth Fund C is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,789 in Growth Fund C on September 3, 2024 and sell it today you would earn a total of 255.00 from holding Growth Fund C or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Aggress vs. Growth Fund C
Performance |
| Timeline |
| Multimanager Lifestyle |
| Growth Fund C |
Multimanager Lifestyle and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Growth Fund
The main advantage of trading using opposite Multimanager Lifestyle and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Growth 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 Growth Fund will offset losses from the drop in Growth 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 |
| Growth Fund vs. Multimanager Lifestyle Aggressive | Growth Fund vs. Ab High Income | Growth Fund vs. Artisan High Income | Growth Fund vs. Western Asset High |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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