Correlation Between Fabwx and Fuhkbx
Can any of the company-specific risk be diversified away by investing in both Fabwx and Fuhkbx 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 Fabwx and Fuhkbx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabwx and Fuhkbx, you can compare the effects of market volatilities on Fabwx and Fuhkbx 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 Fabwx with a short position of Fuhkbx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabwx and Fuhkbx.
Diversification Opportunities for Fabwx and Fuhkbx
Poor diversification
The 3 months correlation between Fabwx and Fuhkbx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx and Fuhkbx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuhkbx and Fabwx 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 Fabwx are associated (or correlated) with Fuhkbx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuhkbx has no effect on the direction of Fabwx i.e., Fabwx and Fuhkbx go up and down completely randomly.
Pair Corralation between Fabwx and Fuhkbx
Assuming the 90 days horizon Fabwx is expected to generate 4.16 times less return on investment than Fuhkbx. In addition to that, Fabwx is 1.93 times more volatile than Fuhkbx. It trades about 0.02 of its total potential returns per unit of risk. Fuhkbx is currently generating about 0.13 per unit of volatility. If you would invest 974.00 in Fuhkbx on November 5, 2024 and sell it today you would earn a total of 16.00 from holding Fuhkbx or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Fabwx vs. Fuhkbx
Performance |
| Timeline |
| Fabwx |
| Fuhkbx |
Fabwx and Fuhkbx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabwx and Fuhkbx
The main advantage of trading using opposite Fabwx and Fuhkbx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx position performs unexpectedly, Fuhkbx 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 Fuhkbx will offset losses from the drop in Fuhkbx's long position.| Fabwx vs. Ashmore Emerging Markets | Fabwx vs. Victory Cemp Market | Fabwx vs. Angel Oak Multi Strategy | Fabwx vs. Calvert Developed Market |
| Fuhkbx vs. Ab Bond Inflation | Fuhkbx vs. Asg Managed Futures | Fuhkbx vs. Guidepath Managed Futures | Fuhkbx vs. Tiaa Cref Inflation Linked Bond |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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