Correlation Between Multifactor Equity and Multi-asset Growth
Can any of the company-specific risk be diversified away by investing in both Multifactor Equity and Multi-asset Growth 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 Multifactor Equity and Multi-asset Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multifactor Equity Fund and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Multifactor Equity and Multi-asset Growth 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 Multifactor Equity with a short position of Multi-asset Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multifactor Equity and Multi-asset Growth.
Diversification Opportunities for Multifactor Equity and Multi-asset Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multifactor and Multi-asset is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Multifactor Equity Fund 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 Multifactor Equity 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 Multifactor Equity Fund are associated (or correlated) with Multi-asset Growth. 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 Multifactor Equity i.e., Multifactor Equity and Multi-asset Growth go up and down completely randomly.
Pair Corralation between Multifactor Equity and Multi-asset Growth
Assuming the 90 days horizon Multifactor Equity Fund is expected to generate 1.65 times more return on investment than Multi-asset Growth. However, Multifactor Equity is 1.65 times more volatile than Multi Asset Growth Strategy. It trades about 0.25 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.25 per unit of risk. If you would invest 1,513 in Multifactor Equity Fund on May 28, 2025 and sell it today you would earn a total of 151.00 from holding Multifactor Equity Fund or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multifactor Equity Fund vs. Multi Asset Growth Strategy
Performance |
| Timeline |
| Multifactor Equity |
| Multi Asset Growth |
Multifactor Equity and Multi-asset Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multifactor Equity and Multi-asset Growth
The main advantage of trading using opposite Multifactor Equity and Multi-asset Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor Equity position performs unexpectedly, Multi-asset Growth 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 Growth will offset losses from the drop in Multi-asset Growth's long position.| Multifactor Equity vs. Siit Large Cap | Multifactor Equity vs. Nuveen Large Cap | Multifactor Equity vs. Wasatch Large Cap | Multifactor Equity vs. Transamerica Large Cap |
| Multi-asset Growth vs. Dodge Global Bond | Multi-asset Growth vs. Scout E Bond | Multi-asset Growth vs. Short Intermediate Bond Fund | Multi-asset Growth vs. Bbh Intermediate Municipal |
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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.
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