Correlation Between Income Fund and First Foundation

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

By analyzing existing cross correlation between Income Fund Of and First Foundation Total, you can compare the effects of market volatilities on Income Fund and First Foundation 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 Income Fund with a short position of First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and First Foundation.

Diversification Opportunities for Income Fund and First Foundation

0.99

Correlation Coefficient

Income Fund  First Foundation

No risk reduction

The 3 months correlation between Income and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and First Foundation Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation Total and Income 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 Income Fund Of are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation Total has no effect on the direction of Income Fund i.e., Income Fund and First Foundation go up and down completely randomly.

Pair Corralation between Income Fund and First Foundation

Assuming the 90 days horizon Income Fund is expected to generate 1.37 times less return on investment than First Foundation. But when comparing it to its historical volatility, Income Fund Of is 1.37 times less risky than First Foundation. It trades about 0.22 of its potential returns per unit of risk. First Foundation Total is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,610  in First Foundation Total on May 2, 2025 and sell it today you would earn a total of  196.00  from holding First Foundation Total or generate 7.51% return on investment over 90 days.

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

Income Fund Of  vs.  First Foundation Total

Income Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Income Fund Of are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Income Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Foundation Total

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Foundation Total are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Foundation may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Income Fund and First Foundation

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

The idea behind Income Fund Of and First Foundation Total 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.