Correlation Between Roumell Opportunistic and Multimanager Lifestyle

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Can any of the company-specific risk be diversified away by investing in both Roumell Opportunistic and Multimanager Lifestyle 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 Roumell Opportunistic and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roumell Opportunistic Value and Multimanager Lifestyle Balanced, you can compare the effects of market volatilities on Roumell Opportunistic and Multimanager Lifestyle 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 Roumell Opportunistic with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roumell Opportunistic and Multimanager Lifestyle.

Diversification Opportunities for Roumell Opportunistic and Multimanager Lifestyle

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Roumell and Multimanager is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ROUMELL OPPORTUNISTIC VALUE and MULTIMANAGER LIFESTYLE BALANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Roumell Opportunistic 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 Roumell Opportunistic Value are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Roumell Opportunistic i.e., Roumell Opportunistic and Multimanager Lifestyle go up and down completely randomly.

Pair Corralation between Roumell Opportunistic and Multimanager Lifestyle

Assuming the 90 days horizon Roumell Opportunistic is expected to generate 1.34 times less return on investment than Multimanager Lifestyle. In addition to that, Roumell Opportunistic is 1.69 times more volatile than Multimanager Lifestyle Balanced. It trades about 0.04 of its total potential returns per unit of risk. Multimanager Lifestyle Balanced is currently generating about 0.09 per unit of volatility. If you would invest  1,176  in Multimanager Lifestyle Balanced on December 29, 2023 and sell it today you would earn a total of  134.00  from holding Multimanager Lifestyle Balanced or generate 11.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.6%
ValuesDaily Returns

ROUMELL OPPORTUNISTIC VALUE  vs.  MULTIMANAGER LIFESTYLE BALANCE

 Performance 
       Timeline  
Roumell Opportunistic 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Roumell Opportunistic Value are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Roumell Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Multimanager Lifestyle 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Multimanager Lifestyle Balanced are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Multimanager Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Roumell Opportunistic and Multimanager Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Roumell Opportunistic and Multimanager Lifestyle

The main advantage of trading using opposite Roumell Opportunistic and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roumell Opportunistic position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.
The idea behind Roumell Opportunistic Value and Multimanager Lifestyle Balanced 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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