Correlation Between 361 Global and First American

Can any of the company-specific risk be diversified away by investing in both 361 Global and First American 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 361 Global and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 361 Global Longshort and First American Funds, you can compare the effects of market volatilities on 361 Global and First American 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 361 Global with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of 361 Global and First American.

Diversification Opportunities for 361 Global and First American

-0.21

Correlation Coefficient

361 Global  First American

Very good diversification

The 3 months correlation between 361 and First is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding 361 Global Longshort and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and 361 Global 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 361 Global Longshort are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of 361 Global i.e., 361 Global and First American go up and down completely randomly.

Pair Corralation between 361 Global and First American

Assuming the 90 days horizon 361 Global Longshort is expected to under-perform the First American. In addition to that, 361 Global is 11.24 times more volatile than First American Funds. It trades about -0.11 of its total potential returns per unit of risk. First American Funds is currently generating about 0.13 per unit of volatility. If you would invest  99.00  in First American Funds on December 27, 2024 and sell it today you would earn a total of  1.00  from holding First American Funds or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

361 Global Longshort  vs.  First American Funds

361 Global Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days 361 Global Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

First American Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First American Funds are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 361 Global and First American

The main advantage of trading using opposite 361 Global and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 361 Global position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.

The idea behind 361 Global Longshort and First American Funds 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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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.