Correlation Between Multi-asset Real and Cajxx

Can any of the company-specific risk be diversified away by investing in both Multi-asset Real and Cajxx 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 Multi-asset Real and Cajxx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multi Asset Real Return and Cajxx, you can compare the effects of market volatilities on Multi-asset Real and Cajxx 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 Multi-asset Real with a short position of Cajxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-asset Real and Cajxx.

Diversification Opportunities for Multi-asset Real and Cajxx

-0.8

Correlation Coefficient

Multi-asset Real  Cajxx

Pay attention - limited upside

The 3 months correlation between Multi-asset and Cajxx is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Real Return and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx and Multi-asset Real 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 Multi Asset Real Return are associated (or correlated) with Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Multi-asset Real i.e., Multi-asset Real and Cajxx go up and down completely randomly.

Pair Corralation between Multi-asset Real and Cajxx

Assuming the 90 days horizon Multi Asset Real Return is expected to under-perform the Cajxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Multi Asset Real Return is 49.81 times less risky than Cajxx. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Cajxx is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Cajxx on October 17, 2024 and sell it today you would earn a total of  0.00  from holding Cajxx or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Multi Asset Real Return  vs.  Cajxx

Multi Asset Real

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Asset Real Return are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi-asset Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cajxx

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi-asset Real and Cajxx

The main advantage of trading using opposite Multi-asset Real and Cajxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-asset Real position performs unexpectedly, Cajxx 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 Cajxx will offset losses from the drop in Cajxx's long position.

The idea behind Multi Asset Real Return and Cajxx 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..