Correlation Between Formidable Fortress and Xtrackers California

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

By analyzing existing cross correlation between Formidable Fortress ETF and Xtrackers California Municipal, you can compare the effects of market volatilities on Formidable Fortress and Xtrackers California 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 Formidable Fortress with a short position of Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formidable Fortress and Xtrackers California.

Diversification Opportunities for Formidable Fortress and Xtrackers California

0.22

Correlation Coefficient

Formidable Fortress  Xtrackers California

Modest diversification

The 3 months correlation between Formidable and Xtrackers is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress ETF and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California and Formidable Fortress 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 Formidable Fortress ETF are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Formidable Fortress i.e., Formidable Fortress and Xtrackers California go up and down completely randomly.

Pair Corralation between Formidable Fortress and Xtrackers California

Given the investment horizon of 90 days Formidable Fortress ETF is expected to under-perform the Xtrackers California. In addition to that, Formidable Fortress is 2.88 times more volatile than Xtrackers California Municipal. It trades about -0.21 of its total potential returns per unit of risk. Xtrackers California Municipal is currently generating about -0.04 per unit of volatility. If you would invest  2,513  in Xtrackers California Municipal on September 20, 2024 and sell it today you would lose (6.00) from holding Xtrackers California Municipal or give up 0.24% of portfolio value over 90 days.

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

Formidable Fortress ETF  vs.  Xtrackers California Municipal

Formidable Fortress ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtrackers California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Formidable Fortress and Xtrackers California

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

The idea behind Formidable Fortress ETF and Xtrackers California Municipal 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..