Correlation Between Circuit Fabology and Formidable ETF

Can any of the company-specific risk be diversified away by investing in both Circuit Fabology and Formidable ETF 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 Circuit Fabology and Formidable ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Circuit Fabology Microelectronics and Formidable ETF, you can compare the effects of market volatilities on Circuit Fabology and Formidable ETF 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 Circuit Fabology with a short position of Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Circuit Fabology and Formidable ETF.

Diversification Opportunities for Circuit Fabology and Formidable ETF

-0.02

Correlation Coefficient

Circuit Fabology  Formidable ETF

Good diversification

The 3 months correlation between Circuit and Formidable is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Circuit Fabology Microelectron and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Circuit Fabology 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 Circuit Fabology Microelectronics are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Circuit Fabology i.e., Circuit Fabology and Formidable ETF go up and down completely randomly.

Pair Corralation between Circuit Fabology and Formidable ETF

Assuming the 90 days trading horizon Circuit Fabology Microelectronics is expected to under-perform the Formidable ETF. In addition to that, Circuit Fabology is 3.77 times more volatile than Formidable ETF. It trades about -0.15 of its total potential returns per unit of risk. Formidable ETF is currently generating about -0.19 per unit of volatility. If you would invest  2,216  in Formidable ETF on September 18, 2024 and sell it today you would lose (58.00) from holding Formidable ETF or give up 2.62% of portfolio value over 90 days.

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

Circuit Fabology Microelectron  vs.  Formidable ETF

Circuit Fabology Mic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Circuit Fabology Microelectronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Circuit Fabology sustained solid returns over the last few months and may actually be approaching a breakup point.

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Circuit Fabology and Formidable ETF

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

The idea behind Circuit Fabology Microelectronics and Formidable ETF 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.