Correlation Between Investment Managers and Return Stacked

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

By analyzing existing cross correlation between Investment Managers Series and Return Stacked Global, you can compare the effects of market volatilities on Investment Managers and Return Stacked 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 Investment Managers with a short position of Return Stacked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Managers and Return Stacked.

Diversification Opportunities for Investment Managers and Return Stacked

0.51

Correlation Coefficient

Investment Managers  Return Stacked

Very weak diversification

The 3 months correlation between Investment and Return is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Investment Managers Series and Return Stacked Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Return Stacked Global and Investment Managers 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 Investment Managers Series are associated (or correlated) with Return Stacked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Return Stacked Global has no effect on the direction of Investment Managers i.e., Investment Managers and Return Stacked go up and down completely randomly.

Pair Corralation between Investment Managers and Return Stacked

Considering the 90-day investment horizon Investment Managers Series is expected to generate 1.33 times more return on investment than Return Stacked. However, Investment Managers is 1.33 times more volatile than Return Stacked Global. It trades about 0.01 of its potential returns per unit of risk. Return Stacked Global is currently generating about 0.0 per unit of risk. If you would invest  1,437  in Investment Managers Series on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Investment Managers Series or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Investment Managers Series  vs.  Return Stacked Global

Investment Managers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Investment Managers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Return Stacked Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Return Stacked Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Return Stacked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investment Managers and Return Stacked

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

The idea behind Investment Managers Series and Return Stacked Global 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.