Correlation Between Tortoise Capital and Multi Strategy

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

By analyzing existing cross correlation between Tortoise Capital Series and The Multi Strategy Growth, you can compare the effects of market volatilities on Tortoise Capital 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 Tortoise Capital with a short position of Multi Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tortoise Capital and Multi Strategy.

Diversification Opportunities for Tortoise Capital and Multi Strategy

0.89

Correlation Coefficient

Tortoise Capital  Multi Strategy

Very poor diversification

The 3 months correlation between Tortoise and Multi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Capital Series 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 Tortoise Capital 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 Tortoise Capital Series 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 Tortoise Capital i.e., Tortoise Capital and Multi Strategy go up and down completely randomly.

Pair Corralation between Tortoise Capital and Multi Strategy

Considering the 90-day investment horizon Tortoise Capital Series is expected to generate 1.75 times more return on investment than Multi Strategy. However, Tortoise Capital is 1.75 times more volatile than The Multi Strategy Growth. It trades about -0.07 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  2,054  in Tortoise Capital Series on September 26, 2024 and sell it today you would lose (33.00) from holding Tortoise Capital Series or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Tortoise Capital Series  vs.  The Multi Strategy Growth

Tortoise Capital Series

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Capital Series are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Tortoise Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Multi Strategy Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, 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 Tortoise Capital and Multi Strategy

The main advantage of trading using opposite Tortoise Capital and Multi Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tortoise Capital 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.

The idea behind Tortoise Capital Series and The Multi Strategy Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.