Correlation Between NYSE Composite and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Multimanager Lifestyle 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 NYSE Composite and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Multimanager Lifestyle Balanced, you can compare the effects of market volatilities on NYSE Composite and Multimanager Lifestyle 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 NYSE Composite with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Multimanager Lifestyle.
Diversification Opportunities for NYSE Composite and Multimanager Lifestyle
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Multimanager is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Multimanager Lifestyle Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and NYSE Composite 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 NYSE Composite are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of NYSE Composite i.e., NYSE Composite and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between NYSE Composite and Multimanager Lifestyle
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Multimanager Lifestyle. In addition to that, NYSE Composite is 1.4 times more volatile than Multimanager Lifestyle Balanced. It trades about -0.04 of its total potential returns per unit of risk. Multimanager Lifestyle Balanced is currently generating about -0.01 per unit of volatility. If you would invest 1,367 in Multimanager Lifestyle Balanced on November 27, 2024 and sell it today you would lose (5.00) from holding Multimanager Lifestyle Balanced or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Multimanager Lifestyle Balance
Performance |
| Timeline |
NYSE Composite and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Multimanager Lifestyle Balanced
Pair trading matchups for Multimanager Lifestyle
Pair Trading with NYSE Composite and Multimanager Lifestyle
The main advantage of trading using opposite NYSE Composite and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Multimanager Lifestyle vs. Global Real Estate | Multimanager Lifestyle vs. Amg Managers Centersquare | Multimanager Lifestyle vs. Tiaa Cref Real Estate | Multimanager Lifestyle vs. Nexpoint Real Estate |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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