Correlation Between Multifactor and Multi-asset Growth
Can any of the company-specific risk be diversified away by investing in both Multifactor 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 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 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 with a short position of Multi-asset Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multifactor and Multi-asset Growth.
Diversification Opportunities for Multifactor and Multi-asset Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multifactor and Multi-asset is 0.98. 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 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 i.e., Multifactor and Multi-asset Growth go up and down completely randomly.
Pair Corralation between Multifactor and Multi-asset Growth
Assuming the 90 days horizon Multifactor Equity Fund is expected to generate 2.04 times more return on investment than Multi-asset Growth. However, Multifactor is 2.04 times more volatile than Multi Asset Growth Strategy. It trades about 0.32 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.34 per unit of risk. If you would invest 1,402 in Multifactor Equity Fund on April 23, 2025 and sell it today you would earn a total of 237.00 from holding Multifactor Equity Fund or generate 16.9% 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 and Multi-asset Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Multifactor and Multi-asset Growth
The main advantage of trading using opposite Multifactor and Multi-asset Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor 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 vs. International Developed Markets | Multifactor vs. Global Real Estate | Multifactor vs. Global Real Estate | Multifactor vs. Global Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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