Correlation Between Fs Multi and Geneva Smid

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

By analyzing existing cross correlation between Fs Multi Strategy Alt and Geneva Smid Cap, you can compare the effects of market volatilities on Fs Multi and Geneva Smid 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 Fs Multi with a short position of Geneva Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fs Multi and Geneva Smid.

Diversification Opportunities for Fs Multi and Geneva Smid

0.8

Correlation Coefficient

Fs Multi  Geneva Smid

Very poor diversification

The 3 months correlation between FSMMX and Geneva is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fs Multi Strategy Alt and Geneva Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geneva Smid Cap and Fs Multi 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 Fs Multi Strategy Alt are associated (or correlated) with Geneva Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geneva Smid Cap has no effect on the direction of Fs Multi i.e., Fs Multi and Geneva Smid go up and down completely randomly.

Pair Corralation between Fs Multi and Geneva Smid

Assuming the 90 days horizon Fs Multi is expected to generate 7.29 times less return on investment than Geneva Smid. But when comparing it to its historical volatility, Fs Multi Strategy Alt is 5.42 times less risky than Geneva Smid. It trades about 0.13 of its potential returns per unit of risk. Geneva Smid Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,004  in Geneva Smid Cap on September 13, 2024 and sell it today you would earn a total of  114.00  from holding Geneva Smid Cap or generate 11.35% return on investment over 90 days.

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

Fs Multi Strategy Alt  vs.  Geneva Smid Cap

Fs Multi Strategy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fs Multi Strategy Alt are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fs Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Geneva Smid Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geneva Smid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Geneva Smid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fs Multi and Geneva Smid

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

The idea behind Fs Multi Strategy Alt and Geneva Smid 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.