Correlation Between Multimedia Portfolio and Leisure Fund

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

By analyzing existing cross correlation between Multimedia Portfolio Multimedia and Leisure Fund Class, you can compare the effects of market volatilities on Multimedia Portfolio and Leisure Fund 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 Multimedia Portfolio with a short position of Leisure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimedia Portfolio and Leisure Fund.

Diversification Opportunities for Multimedia Portfolio and Leisure Fund

0.91

Correlation Coefficient

Multimedia Portfolio  Leisure Fund

Almost no diversification

The 3 months correlation between Multimedia and Leisure is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi and Leisure Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Class and Multimedia Portfolio 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 Multimedia Portfolio Multimedia are associated (or correlated) with Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Class has no effect on the direction of Multimedia Portfolio i.e., Multimedia Portfolio and Leisure Fund go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Leisure Fund

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 1.58 times more return on investment than Leisure Fund. However, Multimedia Portfolio is 1.58 times more volatile than Leisure Fund Class. It trades about 0.06 of its potential returns per unit of risk. Leisure Fund Class is currently generating about -0.19 per unit of risk. If you would invest  11,068  in Multimedia Portfolio Multimedia on September 22, 2024 and sell it today you would earn a total of  170.00  from holding Multimedia Portfolio Multimedia or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Multimedia Portfolio Multimedi  vs.  Leisure Fund Class

Multimedia Portfolio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Leisure Fund Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Leisure Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Multimedia Portfolio and Leisure Fund

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

The idea behind Multimedia Portfolio Multimedia and Leisure Fund Class 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.