Correlation Between Leisure Fund and F PD

Can any of the company-specific risk be diversified away by investing in both Leisure Fund and F PD 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 Leisure Fund and F PD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leisure Fund Class and F PD, you can compare the effects of market volatilities on Leisure Fund and F PD 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 Leisure Fund with a short position of F PD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leisure Fund and F PD.

Diversification Opportunities for Leisure Fund and F PD

-0.4

Correlation Coefficient

Leisure Fund  F PD

Very good diversification

The 3 months correlation between Leisure and F-PD is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Leisure Fund Class and F PD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F PD and Leisure Fund 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 Leisure Fund Class are associated (or correlated) with F PD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F PD has no effect on the direction of Leisure Fund i.e., Leisure Fund and F PD go up and down completely randomly.

Pair Corralation between Leisure Fund and F PD

Assuming the 90 days horizon Leisure Fund Class is expected to under-perform the F PD. In addition to that, Leisure Fund is 2.39 times more volatile than F PD. It trades about -0.28 of its total potential returns per unit of risk. F PD is currently generating about -0.21 per unit of volatility. If you would invest  2,487  in F PD on October 4, 2024 and sell it today you would lose (45.00) from holding F PD or give up 1.81% of portfolio value over 90 days.

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

Leisure Fund Class  vs.  F PD

Leisure Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

F PD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days F PD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, F PD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Leisure Fund and F PD

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

The idea behind Leisure Fund Class and F PD 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 Stocks Directory module to find actively traded stocks across global markets.