Correlation Between Global Multi-strategy and High Yield
Can any of the company-specific risk be diversified away by investing in both Global Multi-strategy and High Yield 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 Global Multi-strategy and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Multi Strategy Fund and High Yield Fund, you can compare the effects of market volatilities on Global Multi-strategy and High Yield 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 Global Multi-strategy with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Multi-strategy and High Yield.
Diversification Opportunities for Global Multi-strategy and High Yield
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and High is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global Multi Strategy Fund and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Global Multi-strategy 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 Global Multi Strategy Fund are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Global Multi-strategy i.e., Global Multi-strategy and High Yield go up and down completely randomly.
Pair Corralation between Global Multi-strategy and High Yield
Assuming the 90 days horizon Global Multi-strategy is expected to generate 1.95 times less return on investment than High Yield. In addition to that, Global Multi-strategy is 1.18 times more volatile than High Yield Fund. It trades about 0.05 of its total potential returns per unit of risk. High Yield Fund is currently generating about 0.12 per unit of volatility. If you would invest 570.00 in High Yield Fund on September 3, 2024 and sell it today you would earn a total of 109.00 from holding High Yield Fund or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Multi Strategy Fund vs. High Yield Fund
Performance |
| Timeline |
| Global Multi Strategy |
| High Yield Fund |
Global Multi-strategy and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Multi-strategy and High Yield
The main advantage of trading using opposite Global Multi-strategy and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Multi-strategy position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Global Multi-strategy vs. Columbia Real Estate | Global Multi-strategy vs. Columbia Real Estate | Global Multi-strategy vs. Us Real Estate | Global Multi-strategy vs. Prudential Real Estate |
| High Yield vs. Blackrock Health Sciences | High Yield vs. Highland Longshort Healthcare | High Yield vs. Tekla Healthcare Opportunities | High Yield vs. Eventide Healthcare Life |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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