Correlation Between Foundry Partners and Rational Defensive

Can any of the company-specific risk be diversified away by investing in both Foundry Partners and Rational Defensive 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 Foundry Partners and Rational Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Foundry Partners Fundamental and Rational Defensive Growth, you can compare the effects of market volatilities on Foundry Partners and Rational Defensive 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 Foundry Partners with a short position of Rational Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foundry Partners and Rational Defensive.

Diversification Opportunities for Foundry Partners and Rational Defensive

0.24

Correlation Coefficient

Foundry Partners  Rational Defensive

Modest diversification

The 3 months correlation between Foundry and Rational is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Foundry Partners Fundamental and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth and Foundry Partners 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 Foundry Partners Fundamental are associated (or correlated) with Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Foundry Partners i.e., Foundry Partners and Rational Defensive go up and down completely randomly.

Pair Corralation between Foundry Partners and Rational Defensive

Assuming the 90 days horizon Foundry Partners Fundamental is expected to under-perform the Rational Defensive. In addition to that, Foundry Partners is 1.46 times more volatile than Rational Defensive Growth. It trades about -0.01 of its total potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.1 per unit of volatility. If you would invest  2,538  in Rational Defensive Growth on October 1, 2024 and sell it today you would earn a total of  1,495  from holding Rational Defensive Growth or generate 58.9% return on investment over 90 days.

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

Foundry Partners Fundamental  vs.  Rational Defensive Growth

Foundry Partners Fun

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rational Defensive Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Foundry Partners and Rational Defensive

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

The idea behind Foundry Partners Fundamental and Rational Defensive Growth 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.