Correlation Between Red Oak and Fs Multi-strategy

Can any of the company-specific risk be diversified away by investing in both Red Oak and Fs Multi-strategy 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 Red Oak and Fs Multi-strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Red Oak Technology and Fs Multi Strategy Alt, you can compare the effects of market volatilities on Red Oak and Fs Multi-strategy 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 Red Oak with a short position of Fs Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Fs Multi-strategy.

Diversification Opportunities for Red Oak and Fs Multi-strategy

-0.21

Correlation Coefficient

Red Oak  Fs Multi-strategy

Very good diversification

The 3 months correlation between Red and FSMMX is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Fs Multi Strategy Alt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Multi Strategy and Red Oak 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 Red Oak Technology are associated (or correlated) with Fs Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Multi Strategy has no effect on the direction of Red Oak i.e., Red Oak and Fs Multi-strategy go up and down completely randomly.

Pair Corralation between Red Oak and Fs Multi-strategy

Assuming the 90 days horizon Red Oak Technology is expected to under-perform the Fs Multi-strategy. In addition to that, Red Oak is 9.23 times more volatile than Fs Multi Strategy Alt. It trades about -0.1 of its total potential returns per unit of risk. Fs Multi Strategy Alt is currently generating about 0.12 per unit of volatility. If you would invest  1,097  in Fs Multi Strategy Alt on December 19, 2024 and sell it today you would earn a total of  13.00  from holding Fs Multi Strategy Alt or generate 1.19% return on investment over 90 days.

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

Red Oak Technology  vs.  Fs Multi Strategy Alt

Red Oak Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Oak Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fs Multi Strategy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fs Multi Strategy Alt are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fs Multi-strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Red Oak and Fs Multi-strategy

The main advantage of trading using opposite Red Oak and Fs Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Fs Multi-strategy 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 Fs Multi-strategy will offset losses from the drop in Fs Multi-strategy's long position.

The idea behind Red Oak Technology and Fs Multi Strategy Alt 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.