Correlation Between Destinations Core and Destinations Multi

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

By analyzing existing cross correlation between Destinations Core Fixed and Destinations Multi Strategy, you can compare the effects of market volatilities on Destinations Core and Destinations Multi 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 Destinations Core with a short position of Destinations Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destinations Core and Destinations Multi.

Diversification Opportunities for Destinations Core and Destinations Multi

-0.39

Correlation Coefficient

Destinations Core  Destinations Multi

Very good diversification

The 3 months correlation between Destinations and Destinations is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Destinations Core Fixed and Destinations Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Multi and Destinations Core 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 Destinations Core Fixed are associated (or correlated) with Destinations Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Multi has no effect on the direction of Destinations Core i.e., Destinations Core and Destinations Multi go up and down completely randomly.

Pair Corralation between Destinations Core and Destinations Multi

Assuming the 90 days horizon Destinations Core is expected to generate 2.26 times less return on investment than Destinations Multi. In addition to that, Destinations Core is 2.31 times more volatile than Destinations Multi Strategy. It trades about 0.04 of its total potential returns per unit of risk. Destinations Multi Strategy is currently generating about 0.2 per unit of volatility. If you would invest  886.00  in Destinations Multi Strategy on September 23, 2024 and sell it today you would earn a total of  172.00  from holding Destinations Multi Strategy or generate 19.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Destinations Core Fixed  vs.  Destinations Multi Strategy

Destinations Core Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Core Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Destinations Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Destinations Multi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Destinations Multi Strategy are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Destinations Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Destinations Core and Destinations Multi

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

The idea behind Destinations Core Fixed and Destinations Multi Strategy 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.

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.