Correlation Between Fulcrum Diversified and Stet California

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

Diversification Opportunities for Fulcrum Diversified and Stet California

0.59

Correlation Coefficient

Fulcrum Diversified  Stet California

Very weak diversification

The 3 months correlation between Fulcrum and Stet is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Stet California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet California Municipal 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 Stet California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet California Municipal has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Stet California go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Stet California

Assuming the 90 days horizon Fulcrum Diversified Absolute is expected to generate 1.89 times more return on investment than Stet California. However, Fulcrum Diversified is 1.89 times more volatile than Stet California Municipal. It trades about 0.04 of its potential returns per unit of risk. Stet California Municipal is currently generating about 0.02 per unit of risk. If you would invest  868.00  in Fulcrum Diversified Absolute on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Fulcrum Diversified Absolute or generate 7.26% return on investment over 90 days.

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

Fulcrum Diversified Absolute  vs.  Stet California Municipal

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.

Stet California Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Fulcrum Diversified Absolute and Stet California Municipal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.