Correlation Between Multifactor Equity and Multi Strategy
Can any of the company-specific risk be diversified away by investing in both Multifactor Equity and Multi Strategy 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 Strategy 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 Strategy Income Fund, you can compare the effects of market volatilities on Multifactor Equity and Multi Strategy 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 Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multifactor Equity and Multi Strategy.
Diversification Opportunities for Multifactor Equity and Multi Strategy
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multifactor and Multi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Multifactor Equity Fund and Multi Strategy Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Strategy Income 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 Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Strategy Income has no effect on the direction of Multifactor Equity i.e., Multifactor Equity and Multi Strategy go up and down completely randomly.
Pair Corralation between Multifactor Equity and Multi Strategy
Assuming the 90 days horizon Multifactor Equity Fund is expected to generate 2.49 times more return on investment than Multi Strategy. However, Multifactor Equity is 2.49 times more volatile than Multi Strategy Income Fund. It trades about 0.3 of its potential returns per unit of risk. Multi Strategy Income Fund is currently generating about 0.25 per unit of risk. If you would invest 1,418 in Multifactor Equity Fund on April 26, 2025 and sell it today you would earn a total of 211.00 from holding Multifactor Equity Fund or generate 14.88% 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 Strategy Income Fund
Performance |
Timeline |
Multifactor Equity |
Multi Strategy Income |
Multifactor Equity and Multi Strategy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Multifactor Equity and Multi Strategy
The main advantage of trading using opposite Multifactor Equity and Multi Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor Equity position performs unexpectedly, Multi Strategy 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 Strategy will offset losses from the drop in Multi Strategy's long position.Multifactor Equity vs. T Rowe Price | Multifactor Equity vs. Eic Value Fund | Multifactor Equity vs. Omni Small Cap Value | Multifactor Equity vs. Versatile Bond Portfolio |
Multi Strategy vs. Intermediate Term Tax Free Bond | Multi Strategy vs. Ab Bond Inflation | Multi Strategy vs. Touchstone Premium Yield | Multi Strategy vs. Multisector Bond Sma |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |