Correlation Between Iaadx and Fanisx

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

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

Diversification Opportunities for Iaadx and Fanisx

0.23

Correlation Coefficient

Iaadx  Fanisx

Modest diversification

The 3 months correlation between Iaadx and Fanisx is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Iaadx and Fanisx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanisx and Iaadx 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 Iaadx are associated (or correlated) with Fanisx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanisx has no effect on the direction of Iaadx i.e., Iaadx and Fanisx go up and down completely randomly.

Pair Corralation between Iaadx and Fanisx

Assuming the 90 days horizon Iaadx is expected to generate 0.86 times more return on investment than Fanisx. However, Iaadx is 1.16 times less risky than Fanisx. It trades about 0.04 of its potential returns per unit of risk. Fanisx is currently generating about -0.04 per unit of risk. If you would invest  910.00  in Iaadx on March 7, 2025 and sell it today you would earn a total of  9.00  from holding Iaadx or generate 0.99% return on investment over 90 days.

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

Iaadx  vs.  Fanisx

Iaadx

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iaadx are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Iaadx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fanisx

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Iaadx and Fanisx

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

The idea behind Iaadx and Fanisx 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.