Correlation Between Retirement Living and Multi Index

Can any of the company-specific risk be diversified away by investing in both Retirement Living 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 Retirement Living and Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Retirement Living Through and Multi Index 2015 Lifetime, you can compare the effects of market volatilities on Retirement Living 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 Retirement Living with a short position of Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retirement Living and Multi Index.

Diversification Opportunities for Retirement Living and Multi Index

1.0

Correlation Coefficient

Retirement Living  Multi Index

No risk reduction

The 3 months correlation between Retirement and Multi is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Retirement Living Through and Multi Index 2015 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2015 and Retirement Living 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 Retirement Living Through 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 2015 has no effect on the direction of Retirement Living i.e., Retirement Living and Multi Index go up and down completely randomly.

Pair Corralation between Retirement Living and Multi Index

Assuming the 90 days horizon Retirement Living is expected to generate 1.16 times less return on investment than Multi Index. But when comparing it to its historical volatility, Retirement Living Through is 1.17 times less risky than Multi Index. It trades about 0.26 of its potential returns per unit of risk. Multi Index 2015 Lifetime is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,042  in Multi Index 2015 Lifetime on April 30, 2025 and sell it today you would earn a total of  48.00  from holding Multi Index 2015 Lifetime or generate 4.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Retirement Living Through  vs.  Multi Index 2015 Lifetime

Retirement Living Through

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Retirement Living Through are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Retirement Living is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Index 2015

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2015 Lifetime are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Multi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Retirement Living and Multi Index

The main advantage of trading using opposite Retirement Living and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retirement Living 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.

The idea behind Retirement Living Through and Multi Index 2015 Lifetime 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.