Correlation Between Fs Multi and Polen Smid

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

Diversification Opportunities for Fs Multi and Polen Smid

0.74

Correlation Coefficient

Fs Multi  Polen Smid

Poor diversification

The 3 months correlation between FSMMX and Polen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fs Multi Strategy Alt and Polen Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Smid 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 Polen Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Smid has no effect on the direction of Fs Multi i.e., Fs Multi and Polen Smid go up and down completely randomly.

Pair Corralation between Fs Multi and Polen Smid

Assuming the 90 days horizon Fs Multi is expected to generate 8.54 times less return on investment than Polen Smid. But when comparing it to its historical volatility, Fs Multi Strategy Alt is 5.89 times less risky than Polen Smid. It trades about 0.13 of its potential returns per unit of risk. Polen Smid is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  775.00  in Polen Smid on September 13, 2024 and sell it today you would earn a total of  104.00  from holding Polen Smid or generate 13.42% return on investment over 90 days.

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

Fs Multi Strategy Alt  vs.  Polen Smid

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.

Polen Smid

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Smid are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Smid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fs Multi and Polen Smid

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

The idea behind Fs Multi Strategy Alt and Polen Smid 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.