Correlation Between Fs Multi-strategy and Fs Real
Can any of the company-specific risk be diversified away by investing in both Fs Multi-strategy and Fs Real 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 Fs Multi-strategy and Fs Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fs Multi Strategy Alt and Fs Real Asset, you can compare the effects of market volatilities on Fs Multi-strategy and Fs Real 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 Fs Multi-strategy with a short position of Fs Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fs Multi-strategy and Fs Real.
Diversification Opportunities for Fs Multi-strategy and Fs Real
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FSMMX and FSRLX is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fs Multi Strategy Alt and Fs Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Real Asset and Fs Multi-strategy 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 Fs Multi Strategy Alt are associated (or correlated) with Fs Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Real Asset has no effect on the direction of Fs Multi-strategy i.e., Fs Multi-strategy and Fs Real go up and down completely randomly.
Pair Corralation between Fs Multi-strategy and Fs Real
Assuming the 90 days horizon Fs Multi-strategy is expected to generate 2.47 times less return on investment than Fs Real. But when comparing it to its historical volatility, Fs Multi Strategy Alt is 3.92 times less risky than Fs Real. It trades about 0.11 of its potential returns per unit of risk. Fs Real Asset is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,086 in Fs Real Asset on September 3, 2024 and sell it today you would earn a total of 247.00 from holding Fs Real Asset or generate 22.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fs Multi Strategy Alt vs. Fs Real Asset
Performance |
| Timeline |
| Fs Multi Strategy |
| Fs Real Asset |
Fs Multi-strategy and Fs Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fs Multi-strategy and Fs Real
The main advantage of trading using opposite Fs Multi-strategy and Fs Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fs Multi-strategy position performs unexpectedly, Fs Real 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 Fs Real will offset losses from the drop in Fs Real's long position.The idea behind Fs Multi Strategy Alt and Fs Real Asset 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.
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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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