Correlation Between Fpa New and Fpa Crescent

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

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

Diversification Opportunities for Fpa New and Fpa Crescent

-0.74

Correlation Coefficient

Fpa New  Fpa Crescent

Pay attention - limited upside

The 3 months correlation between Fpa and Fpa is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fpa New Income and Fpa Crescent Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa Crescent and Fpa New 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 Fpa New Income are associated (or correlated) with Fpa Crescent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa Crescent has no effect on the direction of Fpa New i.e., Fpa New and Fpa Crescent go up and down completely randomly.

Pair Corralation between Fpa New and Fpa Crescent

Assuming the 90 days horizon Fpa New is expected to generate 1.67 times less return on investment than Fpa Crescent. But when comparing it to its historical volatility, Fpa New Income is 6.35 times less risky than Fpa Crescent. It trades about 0.0 of its potential returns per unit of risk. Fpa Crescent Fund is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,015  in Fpa Crescent Fund on January 27, 2025 and sell it today you would lose (11.00) from holding Fpa Crescent Fund or give up 0.27% of portfolio value over 90 days.

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

Fpa New Income  vs.  Fpa Crescent Fund

Fpa New Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa New Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fpa New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fpa Crescent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fpa Crescent Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Fpa Crescent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fpa New and Fpa Crescent

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

The idea behind Fpa New Income and Fpa Crescent 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.