Correlation Between Terminal X and Feat Fund

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

By analyzing existing cross correlation between Terminal X Online and Feat Fund Investments, you can compare the effects of market volatilities on Terminal X and Feat Fund 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 Terminal X with a short position of Feat Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terminal X and Feat Fund.

Diversification Opportunities for Terminal X and Feat Fund

0.2

Correlation Coefficient

Terminal X  Feat Fund

Modest diversification

The 3 months correlation between Terminal and Feat is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Terminal X Online and Feat Fund Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feat Fund Investments and Terminal X 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 Terminal X Online are associated (or correlated) with Feat Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feat Fund Investments has no effect on the direction of Terminal X i.e., Terminal X and Feat Fund go up and down completely randomly.

Pair Corralation between Terminal X and Feat Fund

Assuming the 90 days trading horizon Terminal X Online is expected to under-perform the Feat Fund. In addition to that, Terminal X is 1.13 times more volatile than Feat Fund Investments. It trades about -0.09 of its total potential returns per unit of risk. Feat Fund Investments is currently generating about 0.06 per unit of volatility. If you would invest  13,150  in Feat Fund Investments on December 30, 2024 and sell it today you would earn a total of  590.00  from holding Feat Fund Investments or generate 4.49% return on investment over 90 days.

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

Terminal X Online  vs.  Feat Fund Investments

Terminal X Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terminal X Online has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Feat Fund Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Feat Fund Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Feat Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Terminal X and Feat Fund

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

The idea behind Terminal X Online and Feat Fund Investments 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.