Correlation Between Fabwx and Income Stock
Can any of the company-specific risk be diversified away by investing in both Fabwx and Income Stock 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 Income Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabwx and Income Stock Fund, you can compare the effects of market volatilities on Fabwx and Income Stock 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 Income Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabwx and Income Stock.
Diversification Opportunities for Fabwx and Income Stock
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fabwx and Income is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock 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 Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of Fabwx i.e., Fabwx and Income Stock go up and down completely randomly.
Pair Corralation between Fabwx and Income Stock
Assuming the 90 days horizon Fabwx is expected to generate 0.66 times more return on investment than Income Stock. However, Fabwx is 1.51 times less risky than Income Stock. It trades about 0.11 of its potential returns per unit of risk. Income Stock Fund is currently generating about -0.12 per unit of risk. If you would invest 1,499 in Fabwx on November 8, 2024 and sell it today you would earn a total of 55.00 from holding Fabwx or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 43.33% |
| Values | Daily Returns |
Fabwx vs. Income Stock Fund
Performance |
| Timeline |
| Fabwx |
| Income Stock |
Fabwx and Income Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabwx and Income Stock
The main advantage of trading using opposite Fabwx and Income Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx position performs unexpectedly, Income Stock 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 Income Stock will offset losses from the drop in Income Stock's long position.| Fabwx vs. The Gold Bullion | Fabwx vs. Gabelli Gold Fund | Fabwx vs. International Investors Gold | Fabwx vs. Wells Fargo Advantage |
| Income Stock vs. Payden Government Fund | Income Stock vs. Great West Government Mortgage | Income Stock vs. Us Government Securities | Income Stock vs. Franklin Adjustable Government |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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