Correlation Between Fm Investments and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Fm Investments and Blue Chip 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 Fm Investments and Blue Chip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Investments Large and Blue Chip Fund, you can compare the effects of market volatilities on Fm Investments and Blue Chip 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 Fm Investments with a short position of Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Blue Chip.
Diversification Opportunities for Fm Investments and Blue Chip
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IAFLX and Blue is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund and Fm Investments 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 Fm Investments Large are associated (or correlated) with Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Fm Investments i.e., Fm Investments and Blue Chip go up and down completely randomly.
Pair Corralation between Fm Investments and Blue Chip
Assuming the 90 days horizon Fm Investments Large is expected to generate 1.24 times more return on investment than Blue Chip. However, Fm Investments is 1.24 times more volatile than Blue Chip Fund. It trades about 0.2 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.1 per unit of risk. If you would invest 1,879 in Fm Investments Large on September 13, 2024 and sell it today you would earn a total of 63.00 from holding Fm Investments Large or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Investments Large vs. Blue Chip Fund
Performance |
| Timeline |
| Fm Investments Large |
| Blue Chip Fund |
Fm Investments and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fm Investments and Blue Chip
The main advantage of trading using opposite Fm Investments and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Investments position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip's long position.The idea behind Fm Investments Large and Blue Chip 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.| Blue Chip vs. Morningstar Defensive Bond | Blue Chip vs. Doubleline Yield Opportunities | Blue Chip vs. Ambrus Core Bond | Blue Chip vs. Touchstone Premium Yield |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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