Correlation Between Multi-manager High and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Multi-manager High and Inverse Nasdaq-100 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 Inverse Nasdaq-100 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 Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Multi-manager High and Inverse Nasdaq-100 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 Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager High and Inverse Nasdaq-100.
Diversification Opportunities for Multi-manager High and Inverse Nasdaq-100
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Multi-manager and Inverse is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 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 Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Multi-manager High i.e., Multi-manager High and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Multi-manager High and Inverse Nasdaq-100
Assuming the 90 days horizon Multi Manager High Yield is expected to generate 0.2 times more return on investment than Inverse Nasdaq-100. However, Multi Manager High Yield is 5.08 times less risky than Inverse Nasdaq-100. It trades about 0.15 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.09 per unit of risk. If you would invest 723.00 in Multi Manager High Yield on August 31, 2024 and sell it today you would earn a total of 127.00 from holding Multi Manager High Yield or generate 17.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager High Yield vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Multi Manager High |
| Inverse Nasdaq 100 |
Multi-manager High and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-manager High and Inverse Nasdaq-100
The main advantage of trading using opposite Multi-manager High and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager High position performs unexpectedly, Inverse Nasdaq-100 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| Multi-manager High vs. T Rowe Price | Multi-manager High vs. Strategic Allocation Aggressive | Multi-manager High vs. Metropolitan West High | Multi-manager High vs. Morningstar Aggressive Growth |
| Inverse Nasdaq-100 vs. American Century High | Inverse Nasdaq-100 vs. Multi Manager High Yield | Inverse Nasdaq-100 vs. Virtus High Yield | Inverse Nasdaq-100 vs. Mesirow Financial High |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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