Correlation Between Multi-manager High and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Multi-manager High and Lgm Risk 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 High and Lgm Risk 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 Lgm Risk Managed, you can compare the effects of market volatilities on Multi-manager High and Lgm Risk 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 High with a short position of Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager High and Lgm Risk.
Diversification Opportunities for Multi-manager High and Lgm Risk
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi-manager and Lgm is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed and Multi-manager High 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 Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Multi-manager High i.e., Multi-manager High and Lgm Risk go up and down completely randomly.
Pair Corralation between Multi-manager High and Lgm Risk
Assuming the 90 days horizon Multi Manager High Yield is expected to generate 0.38 times more return on investment than Lgm Risk. However, Multi Manager High Yield is 2.63 times less risky than Lgm Risk. It trades about -0.11 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about -0.23 per unit of risk. If you would invest 844.00 in Multi Manager High Yield on October 11, 2024 and sell it today you would lose (3.00) from holding Multi Manager High Yield or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Multi Manager High Yield vs. Lgm Risk Managed
Performance |
| Timeline |
| Multi Manager High |
| Lgm Risk Managed |
Multi-manager High and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-manager High and Lgm Risk
The main advantage of trading using opposite Multi-manager High and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager High position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Multi-manager High vs. Legg Mason Global | Multi-manager High vs. Mirova Global Green | Multi-manager High vs. Alliancebernstein Global Highome | Multi-manager High vs. Artisan Global Opportunities |
| Lgm Risk vs. Transamerica Cleartrack Retirement | Lgm Risk vs. Qs Moderate Growth | Lgm Risk vs. College Retirement Equities | Lgm Risk vs. American Funds Retirement |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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