Correlation Between Multi Manager and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Multi Manager and Consumer Staples 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 Multi Manager and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager High Yield and Consumer Staples Portfolio, you can compare the effects of market volatilities on Multi Manager and Consumer Staples 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 Multi Manager with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Consumer Staples.
Diversification Opportunities for Multi Manager and Consumer Staples
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Multi and Consumer is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Multi Manager 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 Multi Manager High Yield are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Multi Manager i.e., Multi Manager and Consumer Staples go up and down completely randomly.
Pair Corralation between Multi Manager and Consumer Staples
Assuming the 90 days horizon Multi Manager High Yield is expected to generate 0.3 times more return on investment than Consumer Staples. However, Multi Manager High Yield is 3.38 times less risky than Consumer Staples. It trades about 0.18 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.03 per unit of risk. If you would invest 732.00 in Multi Manager High Yield on August 29, 2024 and sell it today you would earn a total of 117.00 from holding Multi Manager High Yield or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager High Yield vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Multi Manager High |
| Consumer Staples Por |
Multi Manager and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Manager and Consumer Staples
The main advantage of trading using opposite Multi Manager and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Multi Manager vs. Gabelli Gold Fund | Multi Manager vs. Gamco Natural Resources | Multi Manager vs. Wells Fargo Advantage | Multi Manager vs. Short Precious Metals |
| Consumer Staples vs. Vanguard Financials Index | Consumer Staples vs. John Hancock Financial | Consumer Staples vs. Financials Ultrasector Profund | Consumer Staples vs. Blackrock Financial Institutions |
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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