Correlation Between 361 Domestic and Forester Value

Can any of the company-specific risk be diversified away by investing in both 361 Domestic and Forester Value 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 361 Domestic and Forester Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 361 Domestic Longshort and Forester Value Fund, you can compare the effects of market volatilities on 361 Domestic and Forester Value 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 361 Domestic with a short position of Forester Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of 361 Domestic and Forester Value.

Diversification Opportunities for 361 Domestic and Forester Value

0.84

Correlation Coefficient

361 Domestic  Forester Value

Very poor diversification

The 3 months correlation between 361 and FORESTER is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding 361 Domestic Longshort and Forester Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forester Value and 361 Domestic 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 361 Domestic Longshort are associated (or correlated) with Forester Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forester Value has no effect on the direction of 361 Domestic i.e., 361 Domestic and Forester Value go up and down completely randomly.

Pair Corralation between 361 Domestic and Forester Value

Assuming the 90 days horizon 361 Domestic Longshort is expected to generate 1.02 times more return on investment than Forester Value. However, 361 Domestic is 1.02 times more volatile than Forester Value Fund. It trades about -0.01 of its potential returns per unit of risk. Forester Value Fund is currently generating about -0.04 per unit of risk. If you would invest  812.00  in 361 Domestic Longshort on January 17, 2024 and sell it today you would lose (1.00) from holding 361 Domestic Longshort or give up 0.12% of portfolio value over 90 days.

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

361 Domestic Longshort  vs.  Forester Value Fund

361 Domestic Longshort

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 361 Domestic Longshort are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 361 Domestic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Forester Value

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forester Value Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Forester Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 361 Domestic and Forester Value

The main advantage of trading using opposite 361 Domestic and Forester Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 361 Domestic position performs unexpectedly, Forester Value 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 Forester Value will offset losses from the drop in Forester Value's long position.

The idea behind 361 Domestic Longshort and Forester Value Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.