Correlation Between Fabxx and Princeton Longshort

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

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

Diversification Opportunities for Fabxx and Princeton Longshort

0.0

Correlation Coefficient

Fabxx  Princeton Longshort

Pay attention - limited upside

The 3 months correlation between Fabxx and Princeton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Princeton Longshort Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Longshort and Fabxx 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 Fabxx are associated (or correlated) with Princeton Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Longshort has no effect on the direction of Fabxx i.e., Fabxx and Princeton Longshort go up and down completely randomly.

Pair Corralation between Fabxx and Princeton Longshort

If you would invest (100.00) in Princeton Longshort Treasury on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Princeton Longshort Treasury or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fabxx  vs.  Princeton Longshort Treasury

Fabxx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fabxx 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Princeton Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Princeton Longshort Treasury has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Princeton Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fabxx and Princeton Longshort

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

The idea behind Fabxx and Princeton Longshort Treasury 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 Anywhere module to track or share privately all of your investments from the convenience of any device.