Correlation Between Fmasx and Global E
Can any of the company-specific risk be diversified away by investing in both Fmasx and Global E 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 Fmasx and Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fmasx and Global E Portfolio, you can compare the effects of market volatilities on Fmasx and Global E 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 Fmasx with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fmasx and Global E.
Diversification Opportunities for Fmasx and Global E
Poor diversification
The 3 months correlation between Fmasx and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fmasx and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Fmasx 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 Fmasx are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Fmasx i.e., Fmasx and Global E go up and down completely randomly.
Pair Corralation between Fmasx and Global E
Assuming the 90 days horizon Fmasx is expected to generate 1.28 times more return on investment than Global E. However, Fmasx is 1.28 times more volatile than Global E Portfolio. It trades about -0.11 of its potential returns per unit of risk. Global E Portfolio is currently generating about -0.22 per unit of risk. If you would invest 1,540 in Fmasx on October 12, 2024 and sell it today you would lose (39.00) from holding Fmasx or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fmasx vs. Global E Portfolio
Performance |
| Timeline |
| Fmasx |
| Global E Portfolio |
Fmasx and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fmasx and Global E
The main advantage of trading using opposite Fmasx and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fmasx position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.The idea behind Fmasx and Global E Portfolio 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.| Global E vs. Tax Managed Large Cap | Global E vs. Qs Large Cap | Global E vs. Semiconductor Ultrasector Profund | Global E vs. Fmasx |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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