Risk Reduction &
Performance Enhancement Benefits
This is mainly due to
the lack of correlation and sometimes negative correlation between components in the diversified
portfolio. There is even negative correlation between stocks and managed futures as the two
markets move independent
of one another.
In the example to
the right, the overall risk is reduced by almost 82% from -41.0% to -7.5%.
the right, the overall risk is reduced by almost 82% from -41.0% to -7.5%.
The return also increases almost 20% from +7.4% to +8.9%.
Trading futures
and options involves substantial risk of loss no matter who is managing your
money and is not
suitable for all investors. Past
performance is not indicative of future results.
11
Risk Reduction &
Performance Enhancement Benefits