Correlation Between Absolute Convertible and Fs Multi
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Fs Multi 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 Absolute Convertible and Fs Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Fs Multi Strategy Alt, you can compare the effects of market volatilities on Absolute Convertible and Fs Multi 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 Absolute Convertible with a short position of Fs Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Fs Multi.
Diversification Opportunities for Absolute Convertible and Fs Multi
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Absolute and FSMSX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Fs Multi Strategy Alt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Multi Strategy and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Fs Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Multi Strategy has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Fs Multi go up and down completely randomly.
Pair Corralation between Absolute Convertible and Fs Multi
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.52 times less return on investment than Fs Multi. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 3.85 times less risky than Fs Multi. It trades about 0.49 of its potential returns per unit of risk. Fs Multi Strategy Alt is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,106 in Fs Multi Strategy Alt on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Fs Multi Strategy Alt or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Fs Multi Strategy Alt
Performance |
| Timeline |
| Absolute Convertible |
| Fs Multi Strategy |
Absolute Convertible and Fs Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Fs Multi
The main advantage of trading using opposite Absolute Convertible and Fs Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Fs Multi 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 Fs Multi will offset losses from the drop in Fs Multi's long position.| Absolute Convertible vs. Science Technology Fund | Absolute Convertible vs. Vanguard Information Technology | Absolute Convertible vs. Hennessy Technology Fund | Absolute Convertible vs. Red Oak Technology |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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