Correlation Between Firsthand Technology and Materials Portfolio

Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Materials Portfolio 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 Firsthand Technology and Materials Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Firsthand Technology Opportunities and Materials Portfolio Fidelity, you can compare the effects of market volatilities on Firsthand Technology and Materials Portfolio 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 Firsthand Technology with a short position of Materials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Materials Portfolio.

Diversification Opportunities for Firsthand Technology and Materials Portfolio

-0.12

Correlation Coefficient

Firsthand Technology  Materials Portfolio

Good diversification

The 3 months correlation between Firsthand and Materials is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Materials Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Portfolio and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Materials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Portfolio has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Materials Portfolio go up and down completely randomly.

Pair Corralation between Firsthand Technology and Materials Portfolio

Assuming the 90 days horizon Firsthand Technology Opportunities is expected to generate 2.39 times more return on investment than Materials Portfolio. However, Firsthand Technology is 2.39 times more volatile than Materials Portfolio Fidelity. It trades about 0.09 of its potential returns per unit of risk. Materials Portfolio Fidelity is currently generating about -0.62 per unit of risk. If you would invest  382.00  in Firsthand Technology Opportunities on September 22, 2024 and sell it today you would earn a total of  13.00  from holding Firsthand Technology Opportunities or generate 3.4% return on investment over 90 days.

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

Firsthand Technology Opportuni  vs.  Materials Portfolio Fidelity

Firsthand Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Technology Opportunities are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Firsthand Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Firsthand Technology and Materials Portfolio

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

The idea behind Firsthand Technology Opportunities and Materials Portfolio Fidelity 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.