Correlation Between Us Strategic and Global Multi-strategy

Can any of the company-specific risk be diversified away by investing in both Us Strategic and Global 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 Us Strategic and Global Multi-strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Us Strategic Equity and Global Multi Strategy Fund, you can compare the effects of market volatilities on Us Strategic and Global 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 Us Strategic with a short position of Global Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Strategic and Global Multi-strategy.

Diversification Opportunities for Us Strategic and Global Multi-strategy

0.55

Correlation Coefficient

Us Strategic  Global Multi-strategy

Very weak diversification

The 3 months correlation between RUSTX and GLOBAL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Us Strategic Equity and Global Multi Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Multi Strategy and Us Strategic 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 Us Strategic Equity are associated (or correlated) with Global 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 Global Multi Strategy has no effect on the direction of Us Strategic i.e., Us Strategic and Global Multi-strategy go up and down completely randomly.

Pair Corralation between Us Strategic and Global Multi-strategy

Assuming the 90 days horizon Us Strategic Equity is expected to under-perform the Global Multi-strategy. In addition to that, Us Strategic is 4.85 times more volatile than Global Multi Strategy Fund. It trades about -0.06 of its total potential returns per unit of risk. Global Multi Strategy Fund is currently generating about 0.03 per unit of volatility. If you would invest  1,115  in Global Multi Strategy Fund on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Global Multi Strategy Fund or generate 0.36% return on investment over 90 days.

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

Us Strategic Equity  vs.  Global Multi Strategy Fund

Us Strategic Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Strategic Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Us Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Multi Strategy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Multi Strategy Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Multi-strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Strategic and Global Multi-strategy

The main advantage of trading using opposite Us Strategic and Global Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Strategic position performs unexpectedly, Global 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 Global Multi-strategy will offset losses from the drop in Global Multi-strategy's long position.

The idea behind Us Strategic Equity and Global Multi Strategy Fund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.