Correlation Between T Rowe and Multimedia Portfolio

Can any of the company-specific risk be diversified away by investing in both T Rowe and Multimedia Portfolio 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 T Rowe and Multimedia Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T Rowe Price and Multimedia Portfolio Multimedia, you can compare the effects of market volatilities on T Rowe and Multimedia Portfolio 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 T Rowe with a short position of Multimedia Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Multimedia Portfolio.

Diversification Opportunities for T Rowe and Multimedia Portfolio

-0.13

Correlation Coefficient

T Rowe  Multimedia Portfolio

Good diversification

The 3 months correlation between TQAAX and Multimedia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Multimedia Portfolio Multimedi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimedia Portfolio and T Rowe 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 T Rowe Price are associated (or correlated) with Multimedia Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimedia Portfolio has no effect on the direction of T Rowe i.e., T Rowe and Multimedia Portfolio go up and down completely randomly.

Pair Corralation between T Rowe and Multimedia Portfolio

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Multimedia Portfolio. In addition to that, T Rowe is 1.08 times more volatile than Multimedia Portfolio Multimedia. It trades about -0.21 of its total potential returns per unit of risk. Multimedia Portfolio Multimedia is currently generating about -0.01 per unit of volatility. If you would invest  11,540  in Multimedia Portfolio Multimedia on December 3, 2024 and sell it today you would lose (138.00) from holding Multimedia Portfolio Multimedia or give up 1.2% of portfolio value over 90 days.

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

T Rowe Price  vs.  Multimedia Portfolio Multimedi

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Multimedia Portfolio

Risk-Adjusted Performance

Very Weak

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

Pair Trading with T Rowe and Multimedia Portfolio

The main advantage of trading using opposite T Rowe and Multimedia Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Multimedia Portfolio 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 Multimedia Portfolio will offset losses from the drop in Multimedia Portfolio's long position.

The idea behind T Rowe Price and Multimedia Portfolio Multimedia 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.