Correlation Between Fam Value and Matrix Advisors

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

By analyzing existing cross correlation between Fam Value Fund and Matrix Advisors Value, you can compare the effects of market volatilities on Fam Value and Matrix Advisors 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 Fam Value with a short position of Matrix Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fam Value and Matrix Advisors.

Diversification Opportunities for Fam Value and Matrix Advisors

0.55

Correlation Coefficient

Fam Value  Matrix Advisors

Very weak diversification

The 3 months correlation between Fam and Matrix is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fam Value Fund and Matrix Advisors Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Advisors Value and Fam Value 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 Fam Value Fund are associated (or correlated) with Matrix Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Advisors Value has no effect on the direction of Fam Value i.e., Fam Value and Matrix Advisors go up and down completely randomly.

Pair Corralation between Fam Value and Matrix Advisors

Assuming the 90 days horizon Fam Value Fund is expected to under-perform the Matrix Advisors. In addition to that, Fam Value is 1.22 times more volatile than Matrix Advisors Value. It trades about -0.12 of its total potential returns per unit of risk. Matrix Advisors Value is currently generating about -0.09 per unit of volatility. If you would invest  10,792  in Matrix Advisors Value on December 4, 2024 and sell it today you would lose (528.00) from holding Matrix Advisors Value or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Fam Value Fund  vs.  Matrix Advisors Value

Fam Value Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fam Value Fund 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.

Matrix Advisors Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fam Value and Matrix Advisors

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

The idea behind Fam Value Fund and Matrix Advisors Value 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.