Correlation Between Multi Asset and Csjxx

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

By analyzing existing cross correlation between Multi Asset Real Return and Csjxx, you can compare the effects of market volatilities on Multi Asset and Csjxx 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 Asset with a short position of Csjxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Asset and Csjxx.

Diversification Opportunities for Multi Asset and Csjxx

-0.75

Correlation Coefficient

Multi Asset  Csjxx

Pay attention - limited upside

The 3 months correlation between Multi and Csjxx is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Multi Asset Real Return and Csjxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Csjxx and Multi Asset 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 Asset Real Return are associated (or correlated) with Csjxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Csjxx has no effect on the direction of Multi Asset i.e., Multi Asset and Csjxx go up and down completely randomly.

Pair Corralation between Multi Asset and Csjxx

Assuming the 90 days horizon Multi Asset is expected to generate 11.43 times less return on investment than Csjxx. But when comparing it to its historical volatility, Multi Asset Real Return is 22.26 times less risky than Csjxx. It trades about 0.09 of its potential returns per unit of risk. Csjxx is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Csjxx on September 29, 2024 and sell it today you would lose (420.00) from holding Csjxx or give up 80.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Multi Asset Real Return  vs.  Csjxx

Multi Asset Real

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Asset Real Return are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Csjxx

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Csjxx are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Csjxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Asset and Csjxx

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

The idea behind Multi Asset Real Return and Csjxx 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.