Correlation Between Fulcrum Diversified and International Growth
Can any of the company-specific risk be diversified away by investing in both Fulcrum Diversified and International Growth 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 International Growth 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 International Growth Fund, you can compare the effects of market volatilities on Fulcrum Diversified and International Growth 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 International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and International Growth.
Diversification Opportunities for Fulcrum Diversified and International Growth
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fulcrum and International is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and International Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth 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 International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and International Growth go up and down completely randomly.
Pair Corralation between Fulcrum Diversified and International Growth
Assuming the 90 days horizon Fulcrum Diversified Absolute is expected to under-perform the International Growth. In addition to that, Fulcrum Diversified is 1.58 times more volatile than International Growth Fund. It trades about -0.17 of its total potential returns per unit of risk. International Growth Fund is currently generating about 0.3 per unit of volatility. If you would invest 1,181 in International Growth Fund on September 12, 2024 and sell it today you would earn a total of 48.00 from holding International Growth Fund or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fulcrum Diversified Absolute vs. International Growth Fund
Performance |
| Timeline |
| Fulcrum Diversified |
| International Growth |
Fulcrum Diversified and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulcrum Diversified and International Growth
The main advantage of trading using opposite Fulcrum Diversified and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Diversified position performs unexpectedly, International Growth 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 International Growth will offset losses from the drop in International Growth's long position.The idea behind Fulcrum Diversified Absolute and International Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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