Correlation Between Palmer Square and Multi Strategy
Can any of the company-specific risk be diversified away by investing in both Palmer Square and Multi Strategy 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 Palmer Square and Multi Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palmer Square Ultra Short and The Multi Strategy Growth, you can compare the effects of market volatilities on Palmer Square and Multi Strategy 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 Palmer Square with a short position of Multi Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palmer Square and Multi Strategy.
Diversification Opportunities for Palmer Square and Multi Strategy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Palmer and Multi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Palmer Square Ultra Short and The Multi Strategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Strategy and Palmer Square 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 Palmer Square Ultra Short are associated (or correlated) with Multi Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Strategy has no effect on the direction of Palmer Square i.e., Palmer Square and Multi Strategy go up and down completely randomly.
Pair Corralation between Palmer Square and Multi Strategy
Assuming the 90 days horizon Palmer Square Ultra Short is expected to generate 0.05 times more return on investment than Multi Strategy. However, Palmer Square Ultra Short is 20.07 times less risky than Multi Strategy. It trades about 0.56 of its potential returns per unit of risk. The Multi Strategy Growth is currently generating about -0.42 per unit of risk. If you would invest 2,005 in Palmer Square Ultra Short on September 26, 2024 and sell it today you would earn a total of 7.00 from holding Palmer Square Ultra Short or generate 0.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Palmer Square Ultra Short vs. The Multi Strategy Growth
Performance |
Timeline |
Palmer Square Ultra |
Multi Strategy |
Palmer Square and Multi Strategy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Palmer Square and Multi Strategy
The main advantage of trading using opposite Palmer Square and Multi Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palmer Square position performs unexpectedly, Multi Strategy 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 Multi Strategy will offset losses from the drop in Multi Strategy's long position.Palmer Square vs. Palmer Square Ssi | Palmer Square vs. Short Term Income Fund | Palmer Square vs. Palmer Square Income | Palmer Square vs. Acm Dynamic Opportunity |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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