Correlation Between First Foundation and Locorr Hedged
Can any of the company-specific risk be diversified away by investing in both First Foundation and Locorr Hedged 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 First Foundation and Locorr Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Foundation Fixed and Locorr Hedged Core, you can compare the effects of market volatilities on First Foundation and Locorr Hedged 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 First Foundation with a short position of Locorr Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Foundation and Locorr Hedged.
Diversification Opportunities for First Foundation and Locorr Hedged
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Locorr is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Foundation Fixed and Locorr Hedged Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Hedged Core and First Foundation 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 First Foundation Fixed are associated (or correlated) with Locorr Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Hedged Core has no effect on the direction of First Foundation i.e., First Foundation and Locorr Hedged go up and down completely randomly.
Pair Corralation between First Foundation and Locorr Hedged
Assuming the 90 days horizon First Foundation is expected to generate 1.27 times less return on investment than Locorr Hedged. But when comparing it to its historical volatility, First Foundation Fixed is 1.13 times less risky than Locorr Hedged. It trades about 0.07 of its potential returns per unit of risk. Locorr Hedged Core is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Locorr Hedged Core on April 30, 2025 and sell it today you would earn a total of 13.00 from holding Locorr Hedged Core or generate 1.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Foundation Fixed vs. Locorr Hedged Core
Performance |
Timeline |
First Foundation Fixed |
Locorr Hedged Core |
First Foundation and Locorr Hedged Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Foundation and Locorr Hedged
The main advantage of trading using opposite First Foundation and Locorr Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Foundation position performs unexpectedly, Locorr Hedged 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 Locorr Hedged will offset losses from the drop in Locorr Hedged's long position.First Foundation vs. California Municipal Portfolio | First Foundation vs. Ab Municipal Bond | First Foundation vs. Virtus Seix Government | First Foundation vs. Franklin Adjustable Government |
Locorr Hedged vs. The National Tax Free | Locorr Hedged vs. Multisector Bond Sma | Locorr Hedged vs. Ashmore Emerging Markets | Locorr Hedged vs. Ambrus Core Bond |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
AI Portfolio Prophet Use AI to generate optimal portfolios and find profitable investment opportunities |