Correlation Between Advantage Portfolio and Real Assets
Can any of the company-specific risk be diversified away by investing in both Advantage Portfolio and Real Assets 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 Advantage Portfolio and Real Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Portfolio Class and Real Assets Portfolio, you can compare the effects of market volatilities on Advantage Portfolio and Real Assets 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 Advantage Portfolio with a short position of Real Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Portfolio and Real Assets.
Diversification Opportunities for Advantage Portfolio and Real Assets
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advantage and Real is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Portfolio Class and Real Assets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Assets Portfolio and Advantage Portfolio 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 Advantage Portfolio Class are associated (or correlated) with Real Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Assets Portfolio has no effect on the direction of Advantage Portfolio i.e., Advantage Portfolio and Real Assets go up and down completely randomly.
Pair Corralation between Advantage Portfolio and Real Assets
Assuming the 90 days horizon Advantage Portfolio Class is expected to generate 2.92 times more return on investment than Real Assets. However, Advantage Portfolio is 2.92 times more volatile than Real Assets Portfolio. It trades about 0.51 of its potential returns per unit of risk. Real Assets Portfolio is currently generating about -0.09 per unit of risk. If you would invest 1,948 in Advantage Portfolio Class on August 28, 2024 and sell it today you would earn a total of 370.00 from holding Advantage Portfolio Class or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantage Portfolio Class vs. Real Assets Portfolio
Performance |
| Timeline |
| Advantage Portfolio Class |
| Real Assets Portfolio |
Advantage Portfolio and Real Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Portfolio and Real Assets
The main advantage of trading using opposite Advantage Portfolio and Real Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Portfolio position performs unexpectedly, Real Assets 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 Real Assets will offset losses from the drop in Real Assets' long position.| Advantage Portfolio vs. Global Opportunity Portfolio | Advantage Portfolio vs. Morgan Stanley Multi | Advantage Portfolio vs. Ridgeworth Innovative Growth | Advantage Portfolio vs. Growth Portfolio Class |
| Real Assets vs. Emerging Markets Equity | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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