Correlation Between Select Us and Multifactor
Can any of the company-specific risk be diversified away by investing in both Select Us and Multifactor 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 Select Us and Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Multifactor Equity Fund, you can compare the effects of market volatilities on Select Us and Multifactor 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 Select Us with a short position of Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Us and Multifactor.
Diversification Opportunities for Select Us and Multifactor
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Select and Multifactor is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Select Equity Fund and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor Equity and Select Us 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 Select Equity Fund are associated (or correlated) with Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of Select Us i.e., Select Us and Multifactor go up and down completely randomly.
Pair Corralation between Select Us and Multifactor
Assuming the 90 days horizon Select Us is expected to generate 1.12 times less return on investment than Multifactor. In addition to that, Select Us is 1.01 times more volatile than Multifactor Equity Fund. It trades about 0.18 of its total potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.2 per unit of volatility. If you would invest 1,980 in Multifactor Equity Fund on August 25, 2024 and sell it today you would earn a total of 79.00 from holding Multifactor Equity Fund or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Equity Fund vs. Multifactor Equity Fund
Performance |
| Timeline |
| Select Equity |
| Multifactor Equity |
Select Us and Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Us and Multifactor
The main advantage of trading using opposite Select Us and Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Us position performs unexpectedly, Multifactor 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 Multifactor will offset losses from the drop in Multifactor's long position.| Select Us vs. Barings Active Short | Select Us vs. Rbc Bluebay Global | Select Us vs. Ms Global Fixed | Select Us vs. Kinetics Spin Off And |
| Multifactor vs. Ab Global Risk | Multifactor vs. Pace High Yield | Multifactor vs. Goldman Sachs High | Multifactor vs. Pioneer High Income |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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