Correlation Between International Advantage and Investment Managers
Can any of the company-specific risk be diversified away by investing in both International Advantage and Investment Managers 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 International Advantage and Investment Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Advantage Portfolio and Investment Managers Series, you can compare the effects of market volatilities on International Advantage and Investment Managers 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 International Advantage with a short position of Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Advantage and Investment Managers.
Diversification Opportunities for International Advantage and Investment Managers
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Investment is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding International Advantage Portfo and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers and International Advantage 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 International Advantage Portfolio are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of International Advantage i.e., International Advantage and Investment Managers go up and down completely randomly.
Pair Corralation between International Advantage and Investment Managers
Assuming the 90 days horizon International Advantage is expected to generate 2.19 times less return on investment than Investment Managers. In addition to that, International Advantage is 1.3 times more volatile than Investment Managers Series. It trades about 0.04 of its total potential returns per unit of risk. Investment Managers Series is currently generating about 0.11 per unit of volatility. If you would invest 1,063 in Investment Managers Series on August 30, 2024 and sell it today you would earn a total of 438.00 from holding Investment Managers Series or generate 41.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.62% |
| Values | Daily Returns |
International Advantage Portfo vs. Investment Managers Series
Performance |
| Timeline |
| International Advantage |
| Investment Managers |
International Advantage and Investment Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Advantage and Investment Managers
The main advantage of trading using opposite International Advantage and Investment Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Advantage position performs unexpectedly, Investment Managers 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 Investment Managers will offset losses from the drop in Investment Managers' long position.The idea behind International Advantage Portfolio and Investment Managers Series pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Investment Managers vs. Touchstone Small Cap | Investment Managers vs. Small Midcap Dividend Income | Investment Managers vs. Rational Defensive Growth | Investment Managers vs. Champlain Mid Cap |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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