Correlation Between Applied Finance and Fa 529
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Fa 529 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 Fa 529 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 Fa 529 Aggressive, you can compare the effects of market volatilities on Applied Finance and Fa 529 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 Fa 529. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Fa 529.
Diversification Opportunities for Applied Finance and Fa 529
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and FFCGX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Fa 529 Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa 529 Aggressive 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 Fa 529. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa 529 Aggressive has no effect on the direction of Applied Finance i.e., Applied Finance and Fa 529 go up and down completely randomly.
Pair Corralation between Applied Finance and Fa 529
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.05 times more return on investment than Fa 529. However, Applied Finance is 1.05 times more volatile than Fa 529 Aggressive. It trades about -0.1 of its potential returns per unit of risk. Fa 529 Aggressive is currently generating about -0.12 per unit of risk. If you would invest 2,341 in Applied Finance Explorer on September 20, 2024 and sell it today you would lose (38.00) from holding Applied Finance Explorer or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Fa 529 Aggressive
Performance |
| Timeline |
| Applied Finance Explorer |
| Fa 529 Aggressive |
Applied Finance and Fa 529 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Fa 529
The main advantage of trading using opposite Applied Finance and Fa 529 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Fa 529 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 Fa 529 will offset losses from the drop in Fa 529's 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 |
| Fa 529 vs. Fidelity Small Cap | Fa 529 vs. William Blair Small | Fa 529 vs. Applied Finance Explorer | Fa 529 vs. Northern Small Cap |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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