Correlation Between FDO INV and Gen Digital

Can any of the company-specific risk be diversified away by investing in both FDO INV and Gen Digital 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 FDO INV and Gen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FDO INV IMOB and Gen Digital, you can compare the effects of market volatilities on FDO INV and Gen Digital 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 FDO INV with a short position of Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and Gen Digital.

Diversification Opportunities for FDO INV and Gen Digital

0.47

Correlation Coefficient

FDO INV  Gen Digital

Very weak diversification

The 3 months correlation between FDO and Gen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital and FDO INV 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 FDO INV IMOB are associated (or correlated) with Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of FDO INV i.e., FDO INV and Gen Digital go up and down completely randomly.

Pair Corralation between FDO INV and Gen Digital

Assuming the 90 days trading horizon FDO INV IMOB is expected to under-perform the Gen Digital. But the fund apears to be less risky and, when comparing its historical volatility, FDO INV IMOB is 3.14 times less risky than Gen Digital. The fund trades about -0.23 of its potential returns per unit of risk. The Gen Digital is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  17,800  in Gen Digital on October 6, 2024 and sell it today you would earn a total of  93.00  from holding Gen Digital or generate 0.52% return on investment over 90 days.

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

FDO INV IMOB  vs.  Gen Digital

FDO INV IMOB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gen Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gen Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FDO INV and Gen Digital

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

The idea behind FDO INV IMOB and Gen Digital 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.