Correlation Between Pacific Funds and Fuller Thaler

Can any of the company-specific risk be diversified away by investing in both Pacific Funds and Fuller Thaler 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 Pacific Funds and Fuller Thaler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Funds Small Cap and Fuller Thaler Behavioral, you can compare the effects of market volatilities on Pacific Funds and Fuller Thaler 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 Pacific Funds with a short position of Fuller Thaler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Fuller Thaler.

Diversification Opportunities for Pacific Funds and Fuller Thaler

-0.44

Correlation Coefficient

Pacific Funds  Fuller Thaler

Very good diversification

The 3 months correlation between Pacific and Fuller is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Small Cap and Fuller Thaler Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuller Thaler Behavioral and Pacific Funds 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 Pacific Funds Small Cap are associated (or correlated) with Fuller Thaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuller Thaler Behavioral has no effect on the direction of Pacific Funds i.e., Pacific Funds and Fuller Thaler go up and down completely randomly.

Pair Corralation between Pacific Funds and Fuller Thaler

Assuming the 90 days horizon Pacific Funds is expected to generate 17.44 times less return on investment than Fuller Thaler. But when comparing it to its historical volatility, Pacific Funds Small Cap is 1.01 times less risky than Fuller Thaler. It trades about 0.0 of its potential returns per unit of risk. Fuller Thaler Behavioral is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,417  in Fuller Thaler Behavioral on September 16, 2024 and sell it today you would earn a total of  1,303  from holding Fuller Thaler Behavioral or generate 38.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.16%
Values	Daily Returns

Pacific Funds Small Cap  vs.  Fuller Thaler Behavioral

Pacific Funds Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fuller Thaler Behavioral

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pacific Funds and Fuller Thaler

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

The idea behind Pacific Funds Small Cap and Fuller Thaler Behavioral 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.