Correlation Between Select Equity and Multi Asset
Can any of the company-specific risk be diversified away by investing in both Select Equity and Multi Asset 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 Select Equity and Multi Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Multi Asset Growth Strategy, you can compare the effects of market volatilities on Select Equity and Multi Asset 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 Select Equity with a short position of Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Equity and Multi Asset.
Diversification Opportunities for Select Equity and Multi Asset
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Select and Multi is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Select 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 Select 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 Select Equity Fund are associated (or correlated) with Multi Asset. 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 Select Equity i.e., Select Equity and Multi Asset go up and down completely randomly.
Pair Corralation between Select Equity and Multi Asset
Assuming the 90 days horizon Select Equity Fund is expected to generate 2.02 times more return on investment than Multi Asset. However, Select Equity is 2.02 times more volatile than Multi Asset Growth Strategy. It trades about 0.3 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.31 per unit of risk. If you would invest 1,438 in Select Equity Fund on April 29, 2025 and sell it today you would earn a total of 215.00 from holding Select Equity Fund or generate 14.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Select Equity Fund vs. Multi Asset Growth Strategy
Performance |
Timeline |
Select Equity |
Multi Asset Growth |
Select Equity and Multi Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Equity and Multi Asset
The main advantage of trading using opposite Select Equity and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Equity position performs unexpectedly, Multi Asset 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 will offset losses from the drop in Multi Asset's long position.Select Equity vs. Ab Global Risk | Select Equity vs. Mirova Global Sustainable | Select Equity vs. Morgan Stanley Global | Select Equity vs. Ms Global Fixed |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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