Correlation Between Multi Asset and Multi Index
Can any of the company-specific risk be diversified away by investing in both Multi Asset and Multi Index 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 Multi Asset and Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Asset Growth Strategy and Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Multi Asset and Multi Index 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 Multi Asset with a short position of Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Asset and Multi Index.
Diversification Opportunities for Multi Asset and Multi Index
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi and Multi is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 and Multi Asset 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 Multi Asset Growth Strategy are associated (or correlated) with Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Multi Asset i.e., Multi Asset and Multi Index go up and down completely randomly.
Pair Corralation between Multi Asset and Multi Index
Assuming the 90 days horizon Multi Asset is expected to generate 1.34 times less return on investment than Multi Index. But when comparing it to its historical volatility, Multi Asset Growth Strategy is 1.55 times less risky than Multi Index. It trades about 0.11 of its potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Multi Index 2045 Lifetime on April 28, 2025 and sell it today you would earn a total of 448.00 from holding Multi Index 2045 Lifetime or generate 39.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Asset Growth Strategy vs. Multi Index 2045 Lifetime
Performance |
| Timeline |
| Multi Asset Growth |
| Multi Index 2045 |
Multi Asset and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Asset and Multi Index
The main advantage of trading using opposite Multi Asset and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Asset position performs unexpectedly, Multi Index 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 Index will offset losses from the drop in Multi Index's long position.| Multi Asset vs. Ab Bond Inflation | Multi Asset vs. Lord Abbett Inflation | Multi Asset vs. Ab Bond Inflation | Multi Asset vs. Great West Inflation Protected Securities |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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