Correlation Between Global Real and Multi Asset
Can any of the company-specific risk be diversified away by investing in both Global Real and Multi Asset 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 Real and Multi Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Global Real and Multi Asset 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 Real with a short position of Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and Multi Asset.
Diversification Opportunities for Global Real and Multi Asset
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Multi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Multi Asset Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Asset Growth and Global Real 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 Real Estate are associated (or correlated) with Multi Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Asset Growth has no effect on the direction of Global Real i.e., Global Real and Multi Asset go up and down completely randomly.
Pair Corralation between Global Real and Multi Asset
Assuming the 90 days horizon Global Real Estate is expected to under-perform the Multi Asset. In addition to that, Global Real is 2.3 times more volatile than Multi Asset Growth Strategy. It trades about -0.08 of its total potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.18 per unit of volatility. If you would invest 1,065 in Multi Asset Growth Strategy on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Multi Asset Growth Strategy or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Real Estate vs. Multi Asset Growth Strategy
Performance |
| Timeline |
| Global Real Estate |
| Multi Asset Growth |
Global Real and Multi Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Real and Multi Asset
The main advantage of trading using opposite Global Real and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, Multi Asset 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 Multi Asset will offset losses from the drop in Multi Asset's long position.| Global Real vs. Franklin Lifesmart Retirement | Global Real vs. Transamerica Cleartrack Retirement | Global Real vs. Jpmorgan Smartretirement 2035 | Global Real vs. Sierra E Retirement |
| Multi Asset vs. International Developed Markets | Multi Asset vs. Global Real Estate | Multi Asset vs. Global Real Estate | Multi Asset 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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