Correlation Between Multi Manager and Best Buy
Can any of the company-specific risk be diversified away by investing in both Multi Manager and Best Buy 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 Multi Manager and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager Invest and Best Buy Co, you can compare the effects of market volatilities on Multi Manager and Best Buy 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 Multi Manager with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Best Buy.
Diversification Opportunities for Multi Manager and Best Buy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi and Best is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Invest and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Multi Manager 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 Multi Manager Invest are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Multi Manager i.e., Multi Manager and Best Buy go up and down completely randomly.
Pair Corralation between Multi Manager and Best Buy
Assuming the 90 days trading horizon Multi Manager Invest is expected to generate 0.42 times more return on investment than Best Buy. However, Multi Manager Invest is 2.37 times less risky than Best Buy. It trades about -0.02 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.22 per unit of risk. If you would invest 41,647 in Multi Manager Invest on January 26, 2024 and sell it today you would lose (117.00) from holding Multi Manager Invest or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Multi Manager Invest vs. Best Buy Co
Performance |
| Timeline |
| Multi Manager Invest |
| Best Buy |
Multi Manager and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Manager and Best Buy
The main advantage of trading using opposite Multi Manager and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Multi Manager vs. Novo Nordisk AS | Multi Manager vs. Nordea Bank Abp | Multi Manager vs. DSV Panalpina AS | Multi Manager vs. AP Mller |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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