Correlation Between Multi-asset Growth and Balanced Strategy
Can any of the company-specific risk be diversified away by investing in both Multi-asset Growth and Balanced Strategy 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 Growth and Balanced Strategy 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 Balanced Strategy Fund, you can compare the effects of market volatilities on Multi-asset Growth and Balanced Strategy 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 Growth with a short position of Balanced Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-asset Growth and Balanced Strategy.
Diversification Opportunities for Multi-asset Growth and Balanced Strategy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi-asset and Balanced is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy and Balanced Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Strategy and Multi-asset Growth 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 Balanced Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Strategy has no effect on the direction of Multi-asset Growth i.e., Multi-asset Growth and Balanced Strategy go up and down completely randomly.
Pair Corralation between Multi-asset Growth and Balanced Strategy
Assuming the 90 days horizon Multi-asset Growth is expected to generate 62.0 times less return on investment than Balanced Strategy. But when comparing it to its historical volatility, Multi Asset Growth Strategy is 1.02 times less risky than Balanced Strategy. It trades about 0.0 of its potential returns per unit of risk. Balanced Strategy Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,111 in Balanced Strategy Fund on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Balanced Strategy Fund or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Asset Growth Strategy vs. Balanced Strategy Fund
Performance |
| Timeline |
| Multi Asset Growth |
| Balanced Strategy |
Multi-asset Growth and Balanced Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-asset Growth and Balanced Strategy
The main advantage of trading using opposite Multi-asset Growth and Balanced Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-asset Growth position performs unexpectedly, Balanced Strategy 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 Balanced Strategy will offset losses from the drop in Balanced Strategy's long position.| Multi-asset Growth vs. Nasdaq 100 2x Strategy | Multi-asset Growth vs. Shelton Emerging Markets | Multi-asset Growth vs. Angel Oak Multi Strategy | Multi-asset Growth vs. Barings Emerging Markets |
| Balanced Strategy vs. International Developed Markets | Balanced Strategy vs. Global Real Estate | Balanced Strategy vs. Global Real Estate | Balanced Strategy vs. Global 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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