Correlation Between FolioBeyond Rising and KFA Mount

Can any of the company-specific risk be diversified away by investing in both FolioBeyond Rising and KFA Mount 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 FolioBeyond Rising and KFA Mount into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FolioBeyond Rising Rates and KFA Mount Lucas, you can compare the effects of market volatilities on FolioBeyond Rising and KFA Mount 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 FolioBeyond Rising with a short position of KFA Mount. Check out your portfolio center. Please also check ongoing floating volatility patterns of FolioBeyond Rising and KFA Mount.

Diversification Opportunities for FolioBeyond Rising and KFA Mount

-0.83

Correlation Coefficient

FolioBeyond Rising  KFA Mount

Pay attention - limited upside

The 3 months correlation between FolioBeyond and KFA is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding FolioBeyond Rising Rates and KFA Mount Lucas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Mount Lucas and FolioBeyond Rising 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 FolioBeyond Rising Rates are associated (or correlated) with KFA Mount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Mount Lucas has no effect on the direction of FolioBeyond Rising i.e., FolioBeyond Rising and KFA Mount go up and down completely randomly.

Pair Corralation between FolioBeyond Rising and KFA Mount

Given the investment horizon of 90 days FolioBeyond Rising Rates is expected to generate 0.8 times more return on investment than KFA Mount. However, FolioBeyond Rising Rates is 1.25 times less risky than KFA Mount. It trades about 0.16 of its potential returns per unit of risk. KFA Mount Lucas is currently generating about -0.13 per unit of risk. If you would invest  3,331  in FolioBeyond Rising Rates on September 4, 2024 and sell it today you would earn a total of  199.00  from holding FolioBeyond Rising Rates or generate 5.97% return on investment over 90 days.

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

FolioBeyond Rising Rates  vs.  KFA Mount Lucas

FolioBeyond Rising Rates

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FolioBeyond Rising is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

KFA Mount Lucas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KFA Mount Lucas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, KFA Mount is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FolioBeyond Rising and KFA Mount

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

The idea behind FolioBeyond Rising Rates and KFA Mount Lucas 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.