Correlation Between Fulcrum Diversified and Bts Tactical

Can any of the company-specific risk be diversified away by investing in both Fulcrum Diversified and Bts Tactical 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 Bts Tactical 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 Bts Tactical Fixed, you can compare the effects of market volatilities on Fulcrum Diversified and Bts Tactical 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 Bts Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and Bts Tactical.

Diversification Opportunities for Fulcrum Diversified and Bts Tactical

0.72

Correlation Coefficient

Fulcrum Diversified  Bts Tactical

Poor diversification

The 3 months correlation between Fulcrum and Bts is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Bts Tactical Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bts Tactical Fixed 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 Bts Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bts Tactical Fixed has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Bts Tactical go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Bts Tactical

Assuming the 90 days horizon Fulcrum Diversified Absolute is expected to generate 1.07 times more return on investment than Bts Tactical. However, Fulcrum Diversified is 1.07 times more volatile than Bts Tactical Fixed. It trades about 0.04 of its potential returns per unit of risk. Bts Tactical Fixed is currently generating about 0.02 per unit of risk. If you would invest  870.00  in Fulcrum Diversified Absolute on October 11, 2024 and sell it today you would earn a total of  63.00  from holding Fulcrum Diversified Absolute or generate 7.24% return on investment over 90 days.

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

Fulcrum Diversified Absolute  vs.  Bts Tactical Fixed

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.

Bts Tactical Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bts Tactical Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bts Tactical 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 Bts Tactical

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

The idea behind Fulcrum Diversified Absolute and Bts Tactical Fixed 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.