Correlation Between Rational Defensive and Manning Napier

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

By analyzing existing cross correlation between Rational Defensive Growth and Manning Napier Pro Blend, you can compare the effects of market volatilities on Rational Defensive and Manning Napier 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 Rational Defensive with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Defensive and Manning Napier.

Diversification Opportunities for Rational Defensive and Manning Napier

0.42

Correlation Coefficient

Rational Defensive  Manning Napier

Very weak diversification

The 3 months correlation between Rational and Manning is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Manning Napier Pro Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Pro and Rational Defensive 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 Rational Defensive Growth are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Pro has no effect on the direction of Rational Defensive i.e., Rational Defensive and Manning Napier go up and down completely randomly.

Pair Corralation between Rational Defensive and Manning Napier

Assuming the 90 days horizon Rational Defensive Growth is expected to under-perform the Manning Napier. In addition to that, Rational Defensive is 3.05 times more volatile than Manning Napier Pro Blend. It trades about -0.09 of its total potential returns per unit of risk. Manning Napier Pro Blend is currently generating about 0.05 per unit of volatility. If you would invest  1,413  in Manning Napier Pro Blend on December 27, 2024 and sell it today you would earn a total of  16.00  from holding Manning Napier Pro Blend or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Rational Defensive Growth  vs.  Manning Napier Pro Blend

Rational Defensive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Defensive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Manning Napier Pro

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Rational Defensive and Manning Napier

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

The idea behind Rational Defensive Growth and Manning Napier Pro Blend 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.