Correlation Between Kensington Active and Multi-manager High
Can any of the company-specific risk be diversified away by investing in both Kensington Active and Multi-manager High 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 Kensington Active and Multi-manager High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Active Advantage and Multi Manager High Yield, you can compare the effects of market volatilities on Kensington Active and Multi-manager High 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 Kensington Active with a short position of Multi-manager High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Active and Multi-manager High.
Diversification Opportunities for Kensington Active and Multi-manager High
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kensington and Multi-manager is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Active Advantage and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High and Kensington Active 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 Kensington Active Advantage are associated (or correlated) with Multi-manager High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of Kensington Active i.e., Kensington Active and Multi-manager High go up and down completely randomly.
Pair Corralation between Kensington Active and Multi-manager High
Assuming the 90 days horizon Kensington Active is expected to generate 1.28 times less return on investment than Multi-manager High. In addition to that, Kensington Active is 1.88 times more volatile than Multi Manager High Yield. It trades about 0.07 of its total potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.16 per unit of volatility. If you would invest 714.00 in Multi Manager High Yield on November 2, 2024 and sell it today you would earn a total of 135.00 from holding Multi Manager High Yield or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kensington Active Advantage vs. Multi Manager High Yield
Performance |
| Timeline |
| Kensington Active |
| Multi Manager High |
Kensington Active and Multi-manager High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Active and Multi-manager High
The main advantage of trading using opposite Kensington Active and Multi-manager High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Active position performs unexpectedly, Multi-manager High 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 Multi-manager High will offset losses from the drop in Multi-manager High's long position.| Kensington Active vs. Ultra Short Fixed Income | Kensington Active vs. Old Westbury Fixed | Kensington Active vs. Locorr Dynamic Equity | Kensington Active vs. Smallcap World Fund |
| Multi-manager High vs. Davis Financial Fund | Multi-manager High vs. Aig Government Money | Multi-manager High vs. Angel Oak Financial | Multi-manager High vs. Financial Industries Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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