Correlation Between F/m Investments and Palmer Square
Can any of the company-specific risk be diversified away by investing in both F/m Investments and Palmer Square 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 F/m Investments and Palmer Square 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 Palmer Square Income, you can compare the effects of market volatilities on F/m Investments and Palmer Square 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 F/m Investments with a short position of Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of F/m Investments and Palmer Square.
Diversification Opportunities for F/m Investments and Palmer Square
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between F/m and Palmer is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Palmer Square Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Income and F/m 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 Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Income has no effect on the direction of F/m Investments i.e., F/m Investments and Palmer Square go up and down completely randomly.
Pair Corralation between F/m Investments and Palmer Square
Assuming the 90 days horizon Fm Investments Large is expected to generate 14.51 times more return on investment than Palmer Square. However, F/m Investments is 14.51 times more volatile than Palmer Square Income. It trades about 0.32 of its potential returns per unit of risk. Palmer Square Income is currently generating about 0.37 per unit of risk. If you would invest 1,775 in Fm Investments Large on September 1, 2024 and sell it today you would earn a total of 110.00 from holding Fm Investments Large or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Investments Large vs. Palmer Square Income
Performance |
| Timeline |
| Fm Investments Large |
| Palmer Square Income |
F/m Investments and Palmer Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with F/m Investments and Palmer Square
The main advantage of trading using opposite F/m Investments and Palmer Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F/m Investments position performs unexpectedly, Palmer Square 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 Palmer Square will offset losses from the drop in Palmer Square's long position.The idea behind Fm Investments Large and Palmer Square Income 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.| Palmer Square vs. Ishares Municipal Bond | Palmer Square vs. T Rowe Price | Palmer Square vs. Franklin High Yield | Palmer Square vs. Nuveen Arizona Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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