Correlation Between T Rowe and Multi Manager
Can any of the company-specific risk be diversified away by investing in both T Rowe and Multi Manager 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 T Rowe and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Multi Manager High Yield, you can compare the effects of market volatilities on T Rowe and Multi Manager 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 T Rowe with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Multi Manager.
Diversification Opportunities for T Rowe and Multi Manager
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRBCX and Multi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High and T Rowe 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 T Rowe Price are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of T Rowe i.e., T Rowe and Multi Manager go up and down completely randomly.
Pair Corralation between T Rowe and Multi Manager
Assuming the 90 days horizon T Rowe Price is expected to generate 7.9 times more return on investment than Multi Manager. However, T Rowe is 7.9 times more volatile than Multi Manager High Yield. It trades about 0.03 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.14 per unit of risk. If you would invest 18,698 in T Rowe Price on October 30, 2024 and sell it today you would earn a total of 220.00 from holding T Rowe Price or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Multi Manager High Yield
Performance |
| Timeline |
| T Rowe Price |
| Multi Manager High |
T Rowe and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Multi Manager
The main advantage of trading using opposite T Rowe and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Multi Manager 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 Manager will offset losses from the drop in Multi Manager's long position.The idea behind T Rowe Price and Multi Manager High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Multi Manager vs. Ms Global Fixed | Multi Manager vs. Investec Global Franchise | Multi Manager vs. Qs Global Equity | Multi Manager vs. Kinetics Global Fund |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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