Correlation Between Dynamic Allocation and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Dynamic Allocation and Lifex Inflation-protec 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 Dynamic Allocation and Lifex Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Allocation Fund and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Dynamic Allocation and Lifex Inflation-protec 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 Dynamic Allocation with a short position of Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Allocation and Lifex Inflation-protec.
Diversification Opportunities for Dynamic Allocation and Lifex Inflation-protec
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynamic and Lifex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Allocation Fund and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec and Dynamic Allocation 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 Dynamic Allocation Fund are associated (or correlated) with Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Dynamic Allocation i.e., Dynamic Allocation and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Dynamic Allocation and Lifex Inflation-protec
Assuming the 90 days horizon Dynamic Allocation Fund is expected to generate 1.64 times more return on investment than Lifex Inflation-protec. However, Dynamic Allocation is 1.64 times more volatile than Lifex Inflation Protected Income. It trades about 0.09 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.07 per unit of risk. If you would invest 842.00 in Dynamic Allocation Fund on August 28, 2024 and sell it today you would earn a total of 234.00 from holding Dynamic Allocation Fund or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 44.04% |
| Values | Daily Returns |
Dynamic Allocation Fund vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Dynamic Allocation |
| Lifex Inflation-protec |
Dynamic Allocation and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Allocation and Lifex Inflation-protec
The main advantage of trading using opposite Dynamic Allocation and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Allocation position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| Dynamic Allocation vs. Mid Cap Index | Dynamic Allocation vs. Mid Cap Strategic | Dynamic Allocation vs. Valic Company I | Dynamic Allocation vs. Valic Company I |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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