Correlation Between Fuhkbx and Wmcanx
Can any of the company-specific risk be diversified away by investing in both Fuhkbx and Wmcanx 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 Fuhkbx and Wmcanx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuhkbx and Wmcanx, you can compare the effects of market volatilities on Fuhkbx and Wmcanx 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 Fuhkbx with a short position of Wmcanx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuhkbx and Wmcanx.
Diversification Opportunities for Fuhkbx and Wmcanx
Poor diversification
The 3 months correlation between Fuhkbx and Wmcanx is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fuhkbx and Wmcanx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wmcanx and Fuhkbx 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 Fuhkbx are associated (or correlated) with Wmcanx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wmcanx has no effect on the direction of Fuhkbx i.e., Fuhkbx and Wmcanx go up and down completely randomly.
Pair Corralation between Fuhkbx and Wmcanx
Assuming the 90 days trading horizon Fuhkbx is expected to generate 1.18 times less return on investment than Wmcanx. But when comparing it to its historical volatility, Fuhkbx is 1.01 times less risky than Wmcanx. It trades about 0.15 of its potential returns per unit of risk. Wmcanx is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,662 in Wmcanx on November 5, 2024 and sell it today you would earn a total of 43.00 from holding Wmcanx or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.0% |
| Values | Daily Returns |
Fuhkbx vs. Wmcanx
Performance |
| Timeline |
| Fuhkbx |
| Wmcanx |
Fuhkbx and Wmcanx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuhkbx and Wmcanx
The main advantage of trading using opposite Fuhkbx and Wmcanx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuhkbx position performs unexpectedly, Wmcanx 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 Wmcanx will offset losses from the drop in Wmcanx's long position.| Fuhkbx vs. Ab Bond Inflation | Fuhkbx vs. Asg Managed Futures | Fuhkbx vs. Guidepath Managed Futures | Fuhkbx vs. Tiaa Cref Inflation Linked Bond |
| Wmcanx vs. Ultra Short Fixed Income | Wmcanx vs. Enhanced Fixed Income | Wmcanx vs. Aqr Long Short Equity | Wmcanx vs. Gmo International Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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