Correlation Between Multi Asset and Global Infrastructure
Can any of the company-specific risk be diversified away by investing in both Multi Asset and Global Infrastructure 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 Global Infrastructure 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 Global Infrastructure Fund, you can compare the effects of market volatilities on Multi Asset and Global Infrastructure 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 Global Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Asset and Global Infrastructure.
Diversification Opportunities for Multi Asset and Global Infrastructure
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Multi and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy and Global Infrastructure Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Infrastructure 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 Global Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Infrastructure has no effect on the direction of Multi Asset i.e., Multi Asset and Global Infrastructure go up and down completely randomly.
Pair Corralation between Multi Asset and Global Infrastructure
Assuming the 90 days horizon Multi Asset Growth Strategy is expected to generate 0.6 times more return on investment than Global Infrastructure. However, Multi Asset Growth Strategy is 1.68 times less risky than Global Infrastructure. It trades about -0.05 of its potential returns per unit of risk. Global Infrastructure Fund is currently generating about -0.05 per unit of risk. If you would invest 1,086 in Multi Asset Growth Strategy on September 13, 2024 and sell it today you would lose (10.00) from holding Multi Asset Growth Strategy or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Multi Asset Growth Strategy vs. Global Infrastructure Fund
Performance |
| Timeline |
| Multi Asset Growth |
| Global Infrastructure |
Multi Asset and Global Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Asset and Global Infrastructure
The main advantage of trading using opposite Multi Asset and Global Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Asset position performs unexpectedly, Global Infrastructure 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 Global Infrastructure will offset losses from the drop in Global Infrastructure's long position.| Multi Asset vs. International Developed Markets | Multi Asset vs. Global Real Estate | Multi Asset vs. Global Real Estate | Multi Asset vs. Global Real Estate |
| Global Infrastructure vs. International Developed Markets | Global Infrastructure vs. Global Real Estate | Global Infrastructure vs. Global Real Estate | Global Infrastructure 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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