Correlation Between Fulcrum Diversified and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Fulcrum Diversified and Regional Bank 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 Fulcrum Diversified and Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulcrum Diversified Absolute and Regional Bank Fund, you can compare the effects of market volatilities on Fulcrum Diversified and Regional Bank 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 Fulcrum Diversified with a short position of Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and Regional Bank.
Diversification Opportunities for Fulcrum Diversified and Regional Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fulcrum and Regional is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Fulcrum Diversified 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 Fulcrum Diversified Absolute are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Regional Bank go up and down completely randomly.
Pair Corralation between Fulcrum Diversified and Regional Bank
Assuming the 90 days horizon Fulcrum Diversified Absolute is expected to under-perform the Regional Bank. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fulcrum Diversified Absolute is 1.79 times less risky than Regional Bank. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Regional Bank Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,096 in Regional Bank Fund on September 18, 2024 and sell it today you would lose (13.00) from holding Regional Bank Fund or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fulcrum Diversified Absolute vs. Regional Bank Fund
Performance |
| Timeline |
| Fulcrum Diversified |
| Regional Bank |
Fulcrum Diversified and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulcrum Diversified and Regional Bank
The main advantage of trading using opposite Fulcrum Diversified and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Diversified position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Fulcrum Diversified vs. Fulcrum Diversified Absolute | Fulcrum Diversified vs. Eaton Vance Tax | Fulcrum Diversified vs. Victory Floating Rate | Fulcrum Diversified vs. T Rowe Price |
| Regional Bank vs. Fulcrum Diversified Absolute | Regional Bank vs. Lord Abbett Diversified | Regional Bank vs. Jpmorgan Diversified Fund | Regional Bank vs. Federated Hermes Conservative |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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