Correlation Between Multimanager Lifestyle and Extended Market
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Extended Market 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 Multimanager Lifestyle and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Growth and Extended Market Index, you can compare the effects of market volatilities on Multimanager Lifestyle and Extended Market 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 Multimanager Lifestyle with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Extended Market.
Diversification Opportunities for Multimanager Lifestyle and Extended Market
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multimanager and Extended is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Growth and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Multimanager Lifestyle 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 Multimanager Lifestyle Growth are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Extended Market go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Extended Market
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 1.85 times less return on investment than Extended Market. But when comparing it to its historical volatility, Multimanager Lifestyle Growth is 1.98 times less risky than Extended Market. It trades about 0.18 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,970 in Extended Market Index on June 4, 2025 and sell it today you would earn a total of 212.00 from holding Extended Market Index or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multimanager Lifestyle Growth vs. Extended Market Index
Performance |
| Timeline |
| Multimanager Lifestyle |
| Extended Market Index |
Multimanager Lifestyle and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multimanager Lifestyle and Extended Market
The main advantage of trading using opposite Multimanager Lifestyle and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.The idea behind Multimanager Lifestyle Growth and Extended Market Index 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.
| Extended Market vs. Ab Bond Inflation | Extended Market vs. Ab Bond Inflation | Extended Market vs. T Rowe Price | Extended Market vs. Ab Bond Inflation |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |