Correlation Between Fisher Investments and Kensington Active

Can any of the company-specific risk be diversified away by investing in both Fisher Investments and Kensington Active 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 Fisher Investments and Kensington Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fisher Fixed Income and Kensington Active Advantage, you can compare the effects of market volatilities on Fisher Investments and Kensington Active 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 Fisher Investments with a short position of Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisher Investments and Kensington Active.

Diversification Opportunities for Fisher Investments and Kensington Active

-0.45

Correlation Coefficient

Fisher Investments  Kensington Active

Very good diversification

The 3 months correlation between Fisher and Kensington is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Fixed Income and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active and Fisher Investments 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 Fisher Fixed Income are associated (or correlated) with Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Fisher Investments i.e., Fisher Investments and Kensington Active go up and down completely randomly.

Pair Corralation between Fisher Investments and Kensington Active

Assuming the 90 days horizon Fisher Fixed Income is expected to generate 0.5 times more return on investment than Kensington Active. However, Fisher Fixed Income is 2.0 times less risky than Kensington Active. It trades about 0.17 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about -0.09 per unit of risk. If you would invest  855.00  in Fisher Fixed Income on December 23, 2024 and sell it today you would earn a total of  27.00  from holding Fisher Fixed Income or generate 3.16% return on investment over 90 days.

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

Fisher Fixed Income  vs.  Kensington Active Advantage

Fisher Fixed Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Fixed Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Fisher Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kensington Active

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fisher Investments and Kensington Active

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

The idea behind Fisher Fixed Income and Kensington Active Advantage 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.