Correlation Between Aquagold International and Fundamental Large

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Fundamental Large 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 Aquagold International and Fundamental Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Fundamental Large Cap, you can compare the effects of market volatilities on Aquagold International and Fundamental Large 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 Aquagold International with a short position of Fundamental Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Fundamental Large.

Diversification Opportunities for Aquagold International and Fundamental Large

0.93

Correlation Coefficient

Aquagold International  Fundamental Large

Almost no diversification

The 3 months correlation between Aquagold and Fundamental is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Fundamental Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Large Cap and Aquagold International 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 Aquagold International are associated (or correlated) with Fundamental Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Large Cap has no effect on the direction of Aquagold International i.e., Aquagold International and Fundamental Large go up and down completely randomly.

Pair Corralation between Aquagold International and Fundamental Large

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Fundamental Large. In addition to that, Aquagold International is 9.14 times more volatile than Fundamental Large Cap. It trades about -0.17 of its total potential returns per unit of risk. Fundamental Large Cap is currently generating about -0.14 per unit of volatility. If you would invest  8,202  in Fundamental Large Cap on November 29, 2024 and sell it today you would lose (1,002) from holding Fundamental Large Cap or give up 12.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.16%
Values	Daily Returns

Aquagold International  vs.  Fundamental Large Cap

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fundamental Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aquagold International and Fundamental Large

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

The idea behind Aquagold International and Fundamental Large Cap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.