Correlation Between Applied Finance and Foundry Partners
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Foundry Partners 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 Applied Finance and Foundry Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Foundry Partners Fundamental, you can compare the effects of market volatilities on Applied Finance and Foundry Partners 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 Applied Finance with a short position of Foundry Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Foundry Partners.
Diversification Opportunities for Applied Finance and Foundry Partners
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Foundry is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Foundry Partners Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foundry Partners Fun and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Foundry Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foundry Partners Fun has no effect on the direction of Applied Finance i.e., Applied Finance and Foundry Partners go up and down completely randomly.
Pair Corralation between Applied Finance and Foundry Partners
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 0.93 times more return on investment than Foundry Partners. However, Applied Finance Explorer is 1.07 times less risky than Foundry Partners. It trades about 0.26 of its potential returns per unit of risk. Foundry Partners Fundamental is currently generating about 0.15 per unit of risk. If you would invest 2,178 in Applied Finance Explorer on November 7, 2024 and sell it today you would earn a total of 105.00 from holding Applied Finance Explorer or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Foundry Partners Fundamental
Performance |
| Timeline |
| Applied Finance Explorer |
| Foundry Partners Fun |
Applied Finance and Foundry Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Foundry Partners
The main advantage of trading using opposite Applied Finance and Foundry Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Foundry Partners 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 Foundry Partners will offset losses from the drop in Foundry Partners' long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Foundry Partners vs. Foundry Partners Fundamental | Foundry Partners vs. Small Cap Value Profund | Foundry Partners vs. Gmo Opportunistic Income | Foundry Partners vs. Retirement Living Through |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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