Correlation Between Rational Strategic and Multi-asset Growth

Can any of the company-specific risk be diversified away by investing in both Rational Strategic 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 Rational Strategic 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 Rational Strategic Allocation and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Rational Strategic 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 Rational Strategic with a short position of Multi-asset Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Strategic and Multi-asset Growth.

Diversification Opportunities for Rational Strategic and Multi-asset Growth

0.98

Correlation Coefficient

Rational Strategic  Multi-asset Growth

Almost no diversification

The 3 months correlation between Rational and Multi-asset is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation 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 Rational Strategic 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 Rational Strategic Allocation 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 Rational Strategic i.e., Rational Strategic and Multi-asset Growth go up and down completely randomly.

Pair Corralation between Rational Strategic and Multi-asset Growth

Assuming the 90 days horizon Rational Strategic Allocation is expected to generate 3.33 times more return on investment than Multi-asset Growth. However, Rational Strategic is 3.33 times more volatile than Multi Asset Growth Strategy. It trades about 0.35 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.51 per unit of risk. If you would invest  849.00  in Rational Strategic Allocation on July 5, 2025 and sell it today you would earn a total of  60.00  from holding Rational Strategic Allocation or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Rational Strategic Allocation  vs.  Multi Asset Growth Strategy

Rational Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Strategic Allocation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Strategic showed solid returns over the last few months and may actually be approaching a breakup point.

Multi Asset Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Asset Growth Strategy are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-asset Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Strategic and Multi-asset Growth

The main advantage of trading using opposite Rational Strategic and Multi-asset Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Strategic 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.

The idea behind Rational Strategic Allocation and Multi Asset Growth Strategy 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.