Correlation Between Fbanjx and Fabwx
Can any of the company-specific risk be diversified away by investing in both Fbanjx and Fabwx 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 Fbanjx and Fabwx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fbanjx and Fabwx, you can compare the effects of market volatilities on Fbanjx and Fabwx 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 Fbanjx with a short position of Fabwx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fbanjx and Fabwx.
Diversification Opportunities for Fbanjx and Fabwx
Very weak diversification
The 3 months correlation between Fbanjx and Fabwx is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fbanjx and Fabwx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabwx and Fbanjx 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 Fbanjx are associated (or correlated) with Fabwx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabwx has no effect on the direction of Fbanjx i.e., Fbanjx and Fabwx go up and down completely randomly.
Pair Corralation between Fbanjx and Fabwx
Assuming the 90 days trading horizon Fbanjx is expected to generate 1.16 times less return on investment than Fabwx. But when comparing it to its historical volatility, Fbanjx is 1.99 times less risky than Fabwx. It trades about 0.22 of its potential returns per unit of risk. Fabwx is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,503 in Fabwx on November 3, 2024 and sell it today you would earn a total of 53.00 from holding Fabwx or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Fbanjx vs. Fabwx
Performance |
| Timeline |
| Fbanjx |
| Fabwx |
Fbanjx and Fabwx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fbanjx and Fabwx
The main advantage of trading using opposite Fbanjx and Fabwx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fbanjx position performs unexpectedly, Fabwx 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 Fabwx will offset losses from the drop in Fabwx's long position.| Fbanjx vs. Kinetics Global Fund | Fbanjx vs. Barings Global Floating | Fbanjx vs. Commonwealth Global Fund | Fbanjx vs. Gmo Global Equity |
| Fabwx vs. Federated Government Income | Fabwx vs. Intermediate Term Tax Free Bond | Fabwx vs. Jpmorgan Ultra Short Municipal | Fabwx vs. California Municipal Portfolio |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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