Correlation Between Metropolitan West and Total Return
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Total Return 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 Metropolitan West and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Total Return Fund, you can compare the effects of market volatilities on Metropolitan West and Total Return 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 Metropolitan West with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Total Return.
Diversification Opportunities for Metropolitan West and Total Return
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metropolitan and Total is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Metropolitan West 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 Metropolitan West Total are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Metropolitan West i.e., Metropolitan West and Total Return go up and down completely randomly.
Pair Corralation between Metropolitan West and Total Return
Assuming the 90 days horizon Metropolitan West is expected to generate 1.43 times less return on investment than Total Return. In addition to that, Metropolitan West is 1.13 times more volatile than Total Return Fund. It trades about 0.02 of its total potential returns per unit of risk. Total Return Fund is currently generating about 0.04 per unit of volatility. If you would invest 789.00 in Total Return Fund on August 24, 2024 and sell it today you would earn a total of 65.00 from holding Total Return Fund or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. Total Return Fund
Performance |
| Timeline |
| Metropolitan West Total |
| Total Return |
Metropolitan West and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Total Return
The main advantage of trading using opposite Metropolitan West and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Metropolitan West vs. Jhancock Disciplined Value | Metropolitan West vs. Aqr Large Cap | Metropolitan West vs. Knights Of Umbus | Metropolitan West vs. Aqr Large Cap |
| Total Return vs. Vanguard Institutional Index | Total Return vs. Dodge Stock Fund | Total Return vs. Europacific Growth Fund | Total Return vs. Real Return 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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