Correlation Between Fulcrum Diversified and Strategic Asset

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

Diversification Opportunities for Fulcrum Diversified and Strategic Asset

0.78

Correlation Coefficient

Fulcrum Diversified  Strategic Asset

Poor diversification

The 3 months correlation between Fulcrum and Strategic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Strategic Asset go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Strategic Asset

Assuming the 90 days horizon Fulcrum Diversified is expected to generate 1.47 times less return on investment than Strategic Asset. In addition to that, Fulcrum Diversified is 1.04 times more volatile than Strategic Asset Management. It trades about 0.05 of its total potential returns per unit of risk. Strategic Asset Management is currently generating about 0.07 per unit of volatility. If you would invest  1,065  in Strategic Asset Management on October 25, 2024 and sell it today you would earn a total of  137.00  from holding Strategic Asset Management or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Fulcrum Diversified Absolute  vs.  Strategic Asset Management

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.

Strategic Asset Mana

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Strategic Asset Management has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Strategic Asset 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 Strategic Asset

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

The idea behind Fulcrum Diversified Absolute and Strategic Asset Management 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.