Correlation Between Lgm Risk and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Lgm Risk and Multi Manager 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 Lgm Risk and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lgm Risk Managed and Multi Manager High Yield, you can compare the effects of market volatilities on Lgm Risk and Multi Manager 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 Lgm Risk with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Multi Manager.
Diversification Opportunities for Lgm Risk and Multi Manager
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lgm and Multi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed 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 Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Multi Manager. 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 Lgm Risk i.e., Lgm Risk and Multi Manager go up and down completely randomly.
Pair Corralation between Lgm Risk and Multi Manager
Assuming the 90 days horizon Lgm Risk is expected to generate 1.9 times less return on investment than Multi Manager. In addition to that, Lgm Risk is 2.34 times more volatile than Multi Manager High Yield. It trades about 0.09 of its total potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.42 per unit of volatility. If you would invest 837.00 in Multi Manager High Yield on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Multi Manager High Yield or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lgm Risk Managed vs. Multi Manager High Yield
Performance |
| Timeline |
| Lgm Risk Managed |
| Multi Manager High |
Lgm Risk and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgm Risk and Multi Manager
The main advantage of trading using opposite Lgm Risk and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk position performs unexpectedly, Multi Manager 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 will offset losses from the drop in Multi Manager's long position.| Lgm Risk vs. Madison Diversified Income | Lgm Risk vs. Lord Abbett Diversified | Lgm Risk vs. Tiaa Cref Small Cap Blend | Lgm Risk vs. Jhancock Diversified Macro |
| Multi Manager vs. Balanced Allocation Fund | Multi Manager vs. Enhanced Large Pany | Multi Manager vs. Alternative Asset Allocation | Multi Manager vs. Hartford Moderate Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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