Correlation Between TRON and Multi-manager Growth

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

By analyzing existing cross correlation between TRON and Multi Manager Growth Strategies, you can compare the effects of market volatilities on TRON and Multi-manager Growth 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 TRON with a short position of Multi-manager Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Multi-manager Growth.

Diversification Opportunities for TRON and Multi-manager Growth

0.4

Correlation Coefficient

TRON  Multi-manager Growth

Very weak diversification

The 3 months correlation between TRON and Multi-manager is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Multi Manager Growth Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Growth and TRON 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 TRON are associated (or correlated) with Multi-manager Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Growth has no effect on the direction of TRON i.e., TRON and Multi-manager Growth go up and down completely randomly.

Pair Corralation between TRON and Multi-manager Growth

Assuming the 90 days trading horizon TRON is expected to generate 2.82 times more return on investment than Multi-manager Growth. However, TRON is 2.82 times more volatile than Multi Manager Growth Strategies. It trades about -0.03 of its potential returns per unit of risk. Multi Manager Growth Strategies is currently generating about -0.11 per unit of risk. If you would invest  25.00  in TRON on December 19, 2024 and sell it today you would lose (3.00) from holding TRON or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

TRON  vs.  Multi Manager Growth Strategie

TRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for TRON shareholders.

Multi Manager Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Manager Growth Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with TRON and Multi-manager Growth

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

The idea behind TRON and Multi Manager Growth Strategies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.