Correlation Between Consumer Staples and Fisher Investments

Can any of the company-specific risk be diversified away by investing in both Consumer Staples and Fisher Investments 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 Consumer Staples and Fisher Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consumer Staples Portfolio and Fisher Large Cap, you can compare the effects of market volatilities on Consumer Staples and Fisher Investments 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 Consumer Staples with a short position of Fisher Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Fisher Investments.

Diversification Opportunities for Consumer Staples and Fisher Investments

0.35

Correlation Coefficient

Consumer Staples  Fisher Investments

Weak diversification

The 3 months correlation between Consumer and Fisher is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Fisher Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Investments and Consumer Staples 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 Consumer Staples Portfolio are associated (or correlated) with Fisher Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Investments has no effect on the direction of Consumer Staples i.e., Consumer Staples and Fisher Investments go up and down completely randomly.

Pair Corralation between Consumer Staples and Fisher Investments

Assuming the 90 days horizon Consumer Staples is expected to generate 26.1 times less return on investment than Fisher Investments. But when comparing it to its historical volatility, Consumer Staples Portfolio is 1.33 times less risky than Fisher Investments. It trades about 0.01 of its potential returns per unit of risk. Fisher Large Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,107  in Fisher Large Cap on October 11, 2024 and sell it today you would earn a total of  682.00  from holding Fisher Large Cap or generate 61.61% return on investment over 90 days.

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

Consumer Staples Portfolio  vs.  Fisher Large Cap

Consumer Staples Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Staples Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fisher Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Consumer Staples and Fisher Investments

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

The idea behind Consumer Staples Portfolio and Fisher Large Cap 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.