Correlation Between Fundamental Invest and Sparinvest INDEX

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

By analyzing existing cross correlation between Fundamental Invest Stock and Sparinvest INDEX Globale, you can compare the effects of market volatilities on Fundamental Invest and Sparinvest INDEX 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 Fundamental Invest with a short position of Sparinvest INDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Invest and Sparinvest INDEX.

Diversification Opportunities for Fundamental Invest and Sparinvest INDEX

-0.28

Correlation Coefficient

Fundamental Invest  Sparinvest INDEX

Very good diversification

The 3 months correlation between Fundamental and Sparinvest is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Invest Stock and Sparinvest INDEX Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest INDEX Globale and Fundamental Invest 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 Fundamental Invest Stock are associated (or correlated) with Sparinvest INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest INDEX Globale has no effect on the direction of Fundamental Invest i.e., Fundamental Invest and Sparinvest INDEX go up and down completely randomly.

Pair Corralation between Fundamental Invest and Sparinvest INDEX

Assuming the 90 days trading horizon Fundamental Invest Stock is expected to under-perform the Sparinvest INDEX. In addition to that, Fundamental Invest is 2.66 times more volatile than Sparinvest INDEX Globale. It trades about -0.12 of its total potential returns per unit of risk. Sparinvest INDEX Globale is currently generating about 0.06 per unit of volatility. If you would invest  13,319  in Sparinvest INDEX Globale on December 30, 2024 and sell it today you would earn a total of  336.00  from holding Sparinvest INDEX Globale or generate 2.52% return on investment over 90 days.

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

Fundamental Invest Stock  vs.  Sparinvest INDEX Globale

Fundamental Invest Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sparinvest INDEX Globale

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Globale are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Sparinvest INDEX is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fundamental Invest and Sparinvest INDEX

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

The idea behind Fundamental Invest Stock and Sparinvest INDEX Globale 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..