Correlation Between Fmasx and Global Strategy

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

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

Diversification Opportunities for Fmasx and Global Strategy

0.54

Correlation Coefficient

Fmasx  Global Strategy

Very weak diversification

The 3 months correlation between Fmasx and Global is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fmasx and Global Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategy and Fmasx 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 Fmasx are associated (or correlated) with Global Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategy has no effect on the direction of Fmasx i.e., Fmasx and Global Strategy go up and down completely randomly.

Pair Corralation between Fmasx and Global Strategy

Assuming the 90 days horizon Fmasx is expected to under-perform the Global Strategy. In addition to that, Fmasx is 2.06 times more volatile than Global Strategy Fund. It trades about -0.08 of its total potential returns per unit of risk. Global Strategy Fund is currently generating about 0.03 per unit of volatility. If you would invest  980.00  in Global Strategy Fund on December 20, 2024 and sell it today you would earn a total of  10.00  from holding Global Strategy Fund or generate 1.02% return on investment over 90 days.

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

Fmasx  vs.  Global Strategy Fund

Fmasx

Risk-Adjusted Performance

Very Weak

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

Global Strategy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Strategy Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fmasx and Global Strategy

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

The idea behind Fmasx and Global Strategy Fund 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.