Correlation Between Multi-asset Growth and Multifactor Equity
Can any of the company-specific risk be diversified away by investing in both Multi-asset Growth and Multifactor Equity 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 Growth and Multifactor Equity 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 Multifactor Equity Fund, you can compare the effects of market volatilities on Multi-asset Growth and Multifactor Equity 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 Growth with a short position of Multifactor Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-asset Growth and Multifactor Equity.
Diversification Opportunities for Multi-asset Growth and Multifactor Equity
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi-asset and Multifactor is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Growth Strategy and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor Equity and Multi-asset Growth 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 Multifactor Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of Multi-asset Growth i.e., Multi-asset Growth and Multifactor Equity go up and down completely randomly.
Pair Corralation between Multi-asset Growth and Multifactor Equity
Assuming the 90 days horizon Multi-asset Growth is expected to generate 1.15 times less return on investment than Multifactor Equity. But when comparing it to its historical volatility, Multi Asset Growth Strategy is 1.75 times less risky than Multifactor Equity. It trades about 0.1 of its potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,547 in Multifactor Equity Fund on March 25, 2025 and sell it today you would earn a total of 11.00 from holding Multifactor Equity Fund or generate 0.71% 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. Multifactor Equity Fund
Performance |
| Timeline |
| Multi Asset Growth |
| Multifactor Equity |
Multi-asset Growth and Multifactor Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-asset Growth and Multifactor Equity
The main advantage of trading using opposite Multi-asset Growth and Multifactor Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-asset Growth position performs unexpectedly, Multifactor Equity 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 Multifactor Equity will offset losses from the drop in Multifactor Equity's long position.| Multi-asset Growth vs. Intermediate Term Bond Fund | Multi-asset Growth vs. Auer Growth Fund | Multi-asset Growth vs. Delaware Limited Term Diversified | Multi-asset Growth vs. Elfun Diversified Fund |
| Multifactor Equity vs. Hennessy Bp Energy | Multifactor Equity vs. Ivy Natural Resources | Multifactor Equity vs. Gmo Resources | Multifactor Equity vs. Dreyfus Natural Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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