Correlation Between Multimanager Lifestyle and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Multimanager Lifestyle and Regional Bank 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 Multimanager Lifestyle and Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multimanager Lifestyle Growth and Regional Bank Fund, you can compare the effects of market volatilities on Multimanager Lifestyle and Regional Bank 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 Multimanager Lifestyle with a short position of Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Regional Bank.
Diversification Opportunities for Multimanager Lifestyle and Regional Bank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multimanager and Regional is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Growth and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Multimanager Lifestyle 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 Multimanager Lifestyle Growth are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Regional Bank go up and down completely randomly.
Pair Corralation between Multimanager Lifestyle and Regional Bank
Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 4.04 times less return on investment than Regional Bank. But when comparing it to its historical volatility, Multimanager Lifestyle Growth is 4.03 times less risky than Regional Bank. It trades about 0.15 of its potential returns per unit of risk. Regional Bank Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,760 in Regional Bank Fund on September 12, 2024 and sell it today you would earn a total of 549.00 from holding Regional Bank Fund or generate 19.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Multimanager Lifestyle Growth vs. Regional Bank Fund
Performance |
Timeline |
Multimanager Lifestyle |
Regional Bank |
Multimanager Lifestyle and Regional Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Multimanager Lifestyle and Regional Bank
The main advantage of trading using opposite Multimanager Lifestyle and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimanager Lifestyle position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.Multimanager Lifestyle vs. Artisan High Income | Multimanager Lifestyle vs. Msift High Yield | Multimanager Lifestyle vs. Gmo High Yield | Multimanager Lifestyle vs. T Rowe Price |
Regional Bank vs. T Rowe Price | Regional Bank vs. Lgm Risk Managed | Regional Bank vs. Metropolitan West High | Regional Bank vs. Ab Global Risk |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |