Correlation Between Balanced Fund and Multi Asset
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Multi Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Multi Asset.
Diversification Opportunities for Balanced Fund and Multi Asset
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Balanced and Multi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor 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 Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and Multi Asset go up and down completely randomly.
Pair Corralation between Balanced Fund and Multi Asset
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 1.11 times more return on investment than Multi Asset. However, Balanced Fund is 1.11 times more volatile than Multi Asset Growth Strategy. It trades about 0.11 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.1 per unit of risk. If you would invest 1,523 in Balanced Fund Investor on September 14, 2024 and sell it today you would earn a total of 518.00 from holding Balanced Fund Investor or generate 34.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Multi Asset Growth Strategy
Performance |
| Timeline |
| Balanced Fund Investor |
| Multi Asset Growth |
Balanced Fund and Multi Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Multi Asset
The main advantage of trading using opposite Balanced Fund and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Strategic Allocation Servative | Balanced Fund vs. Strategic Allocation Aggressive | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. International Growth Fund |
| Multi Asset vs. Scharf Global Opportunity | Multi Asset vs. Iaadx | Multi Asset vs. Leggmason Partners Institutional | Multi Asset vs. Balanced Fund Investor |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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