Correlation Between LG Russell and Multi Units
Can any of the company-specific risk be diversified away by investing in both LG Russell and Multi Units 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 LG Russell and Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Russell 2000 and Multi Units Luxembourg, you can compare the effects of market volatilities on LG Russell and Multi Units 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 LG Russell with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Russell and Multi Units.
Diversification Opportunities for LG Russell and Multi Units
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RTWO and Multi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LG Russell 2000 and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg and LG Russell 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 LG Russell 2000 are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of LG Russell i.e., LG Russell and Multi Units go up and down completely randomly.
Pair Corralation between LG Russell and Multi Units
Assuming the 90 days trading horizon LG Russell 2000 is expected to generate 0.6 times more return on investment than Multi Units. However, LG Russell 2000 is 1.66 times less risky than Multi Units. It trades about 0.1 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.0 per unit of risk. If you would invest 9,357 in LG Russell 2000 on November 2, 2024 and sell it today you would earn a total of 1,245 from holding LG Russell 2000 or generate 13.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
LG Russell 2000 vs. Multi Units Luxembourg
Performance |
| Timeline |
| LG Russell 2000 |
| Multi Units Luxembourg |
LG Russell and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Russell and Multi Units
The main advantage of trading using opposite LG Russell and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Russell position performs unexpectedly, Multi Units 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 Units will offset losses from the drop in Multi Units' long position.| LG Russell vs. VanEck Multi Asset Growth | LG Russell vs. iShares III Public | LG Russell vs. iShares Core MSCI | LG Russell vs. iShares France Govt |
| Multi Units vs. Vanguard SP 500 | Multi Units vs. SPDR Dow Jones | Multi Units vs. iShares Core MSCI | Multi Units vs. iShares SP 500 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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