Correlation Between Multifactor Equity and Global Infrastructure
Can any of the company-specific risk be diversified away by investing in both Multifactor Equity and Global Infrastructure 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 Global Infrastructure 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 Global Infrastructure Fund, you can compare the effects of market volatilities on Multifactor Equity and Global Infrastructure 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 Global Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multifactor Equity and Global Infrastructure.
Diversification Opportunities for Multifactor Equity and Global Infrastructure
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multifactor and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Multifactor Equity Fund and Global Infrastructure Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Infrastructure 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 Global Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Infrastructure has no effect on the direction of Multifactor Equity i.e., Multifactor Equity and Global Infrastructure go up and down completely randomly.
Pair Corralation between Multifactor Equity and Global Infrastructure
Assuming the 90 days horizon Multifactor Equity Fund is expected to generate 1.33 times more return on investment than Global Infrastructure. However, Multifactor Equity is 1.33 times more volatile than Global Infrastructure Fund. It trades about 0.29 of its potential returns per unit of risk. Global Infrastructure Fund is currently generating about 0.14 per unit of risk. If you would invest 1,450 in Multifactor Equity Fund on April 29, 2025 and sell it today you would earn a total of 211.00 from holding Multifactor Equity Fund or generate 14.55% 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. Global Infrastructure Fund
Performance |
Timeline |
Multifactor Equity |
Global Infrastructure |
Multifactor Equity and Global Infrastructure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Multifactor Equity and Global Infrastructure
The main advantage of trading using opposite Multifactor Equity and Global Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor Equity position performs unexpectedly, Global Infrastructure 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 Global Infrastructure will offset losses from the drop in Global Infrastructure's long position.Multifactor Equity vs. Artisan High Income | Multifactor Equity vs. Old Westbury California | Multifactor Equity vs. The National Tax Free | Multifactor Equity vs. Ambrus Core Bond |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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