Correlation Between Ft 7934: and Financial Services

Can any of the company-specific risk be diversified away by investing in both Ft 7934: and Financial Services 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 Ft 7934: and Financial Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ft 7934 Corporate and Financial Services Fund, you can compare the effects of market volatilities on Ft 7934: and Financial Services 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 Ft 7934: with a short position of Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ft 7934: and Financial Services.

Diversification Opportunities for Ft 7934: and Financial Services

-0.07

Correlation Coefficient

Ft 7934:  Financial Services

Good diversification

The 3 months correlation between FZNQEX and Financial is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ft 7934 Corporate and Financial Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services and Ft 7934: 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 Ft 7934 Corporate are associated (or correlated) with Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Ft 7934: i.e., Ft 7934: and Financial Services go up and down completely randomly.

Pair Corralation between Ft 7934: and Financial Services

Assuming the 90 days trading horizon Ft 7934 Corporate is expected to generate 0.09 times more return on investment than Financial Services. However, Ft 7934 Corporate is 10.65 times less risky than Financial Services. It trades about 0.11 of its potential returns per unit of risk. Financial Services Fund is currently generating about 0.0 per unit of risk. If you would invest  57,701  in Ft 7934 Corporate on December 22, 2024 and sell it today you would earn a total of  388.00  from holding Ft 7934 Corporate or generate 0.67% return on investment over 90 days.

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

Ft 7934 Corporate  vs.  Financial Services Fund

Ft 7934 Corporate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ft 7934 Corporate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ft 7934: is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financial Services

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ft 7934: and Financial Services

The main advantage of trading using opposite Ft 7934: and Financial Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ft 7934: position performs unexpectedly, Financial Services 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 Financial Services will offset losses from the drop in Financial Services' long position.

The idea behind Ft 7934 Corporate and Financial Services 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.