Correlation Between Fulcrum Diversified and Api Growth

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

By analyzing existing cross correlation between Fulcrum Diversified Absolute and Api Growth Fund, you can compare the effects of market volatilities on Fulcrum Diversified and Api Growth 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 Fulcrum Diversified with a short position of Api Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and Api Growth.

Diversification Opportunities for Fulcrum Diversified and Api Growth

0.81

Correlation Coefficient

Fulcrum Diversified  Api Growth

Very poor diversification

The 3 months correlation between Fulcrum and Api is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Api Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Growth Fund and Fulcrum Diversified 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 Fulcrum Diversified Absolute are associated (or correlated) with Api Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Growth Fund has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Api Growth go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Api Growth

Assuming the 90 days horizon Fulcrum Diversified is expected to generate 3.09 times less return on investment than Api Growth. But when comparing it to its historical volatility, Fulcrum Diversified Absolute is 2.61 times less risky than Api Growth. It trades about 0.03 of its potential returns per unit of risk. Api Growth Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,729  in Api Growth Fund on October 12, 2024 and sell it today you would earn a total of  114.00  from holding Api Growth Fund or generate 6.59% return on investment over 90 days.

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

Fulcrum Diversified Absolute  vs.  Api Growth Fund

Fulcrum Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Api Growth Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fulcrum Diversified and Api Growth

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

The idea behind Fulcrum Diversified Absolute and Api Growth Fund 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.