Correlation Between Firsthand Technology and Biotechnology Fund
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Biotechnology Fund 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 Firsthand Technology and Biotechnology Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and Biotechnology Fund Class, you can compare the effects of market volatilities on Firsthand Technology and Biotechnology Fund 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 Firsthand Technology with a short position of Biotechnology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Biotechnology Fund.
Diversification Opportunities for Firsthand Technology and Biotechnology Fund
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Firsthand and BIOTECHNOLOGY is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Biotechnology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Fund Class and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Biotechnology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Fund Class has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Biotechnology Fund go up and down completely randomly.
Pair Corralation between Firsthand Technology and Biotechnology Fund
Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the Biotechnology Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Firsthand Technology Opportunities is 3.27 times less risky than Biotechnology Fund. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Biotechnology Fund Class is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,705 in Biotechnology Fund Class on October 13, 2024 and sell it today you would lose (237.00) from holding Biotechnology Fund Class or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. Biotechnology Fund Class
Performance |
| Timeline |
| Firsthand Technology |
| Biotechnology Fund Class |
Firsthand Technology and Biotechnology Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and Biotechnology Fund
The main advantage of trading using opposite Firsthand Technology and Biotechnology Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology position performs unexpectedly, Biotechnology Fund 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 Biotechnology Fund will offset losses from the drop in Biotechnology Fund's long position.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet Fund |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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