Correlation Between Feat Fund and Iargento

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

By analyzing existing cross correlation between Feat Fund Investments and Iargento Hi Tech, you can compare the effects of market volatilities on Feat Fund and Iargento 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 Feat Fund with a short position of Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feat Fund and Iargento.

Diversification Opportunities for Feat Fund and Iargento

0.72

Correlation Coefficient

Feat Fund  Iargento

Poor diversification

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

Pair Corralation between Feat Fund and Iargento

Assuming the 90 days trading horizon Feat Fund is expected to generate 1.57 times less return on investment than Iargento. But when comparing it to its historical volatility, Feat Fund Investments is 2.52 times less risky than Iargento. It trades about 0.06 of its potential returns per unit of risk. Iargento Hi Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,440  in Iargento Hi Tech on December 30, 2024 and sell it today you would earn a total of  270.00  from holding Iargento Hi Tech or generate 3.2% return on investment over 90 days.

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

Feat Fund Investments  vs.  Iargento Hi Tech

Feat Fund Investments

Risk-Adjusted Performance

Insignificant

Over the last 90 days Feat Fund Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Feat Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Iargento Hi Tech

Risk-Adjusted Performance

Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Iargento may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Feat Fund and Iargento

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

The idea behind Feat Fund Investments and Iargento Hi Tech 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 Global Correlations module to find global opportunities by holding instruments from different markets.