Correlation Between Multi Asset and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Multi Asset and Absolute Convertible 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 Asset and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Asset Growth Strategy and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Multi Asset and Absolute Convertible 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 Asset with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Asset and Absolute Convertible.
Diversification Opportunities for Multi Asset and Absolute Convertible
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Multi and Absolute is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Multi Asset 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 Asset Growth Strategy are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Multi Asset i.e., Multi Asset and Absolute Convertible go up and down completely randomly.
Pair Corralation between Multi Asset and Absolute Convertible
Assuming the 90 days horizon Multi Asset Growth Strategy is expected to generate 7.5 times more return on investment than Absolute Convertible. However, Multi Asset is 7.5 times more volatile than Absolute Convertible Arbitrage. It trades about 0.11 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.37 per unit of risk. If you would invest 860.00 in Multi Asset Growth Strategy on September 14, 2024 and sell it today you would earn a total of 242.00 from holding Multi Asset Growth Strategy or generate 28.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Asset Growth Strategy vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Multi Asset Growth |
| Absolute Convertible |
Multi Asset and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Asset and Absolute Convertible
The main advantage of trading using opposite Multi Asset and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Asset position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Multi Asset vs. Franklin Emerging Market | Multi Asset vs. Angel Oak Multi Strategy | Multi Asset vs. Nasdaq 100 2x Strategy | Multi Asset vs. Pace International Emerging |
| Absolute Convertible vs. Allianzgi Convertible Income | Absolute Convertible vs. Lord Abbett Convertible | Absolute Convertible vs. Rationalpier 88 Convertible | Absolute Convertible vs. Virtus Convertible |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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