Correlation Between M Large and Fs Multi-strategy

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

By analyzing existing cross correlation between M Large Cap and Fs Multi Strategy Alt, you can compare the effects of market volatilities on M Large and Fs Multi-strategy 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 M Large with a short position of Fs Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Fs Multi-strategy.

Diversification Opportunities for M Large and Fs Multi-strategy

0.94

Correlation Coefficient

M Large  Fs Multi-strategy

Almost no diversification

The 3 months correlation between MTCGX and FSMSX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Fs Multi Strategy Alt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Multi Strategy and M Large 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 M Large Cap are associated (or correlated) with Fs Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Multi Strategy has no effect on the direction of M Large i.e., M Large and Fs Multi-strategy go up and down completely randomly.

Pair Corralation between M Large and Fs Multi-strategy

Assuming the 90 days horizon M Large Cap is expected to generate 5.23 times more return on investment than Fs Multi-strategy. However, M Large is 5.23 times more volatile than Fs Multi Strategy Alt. It trades about 0.18 of its potential returns per unit of risk. Fs Multi Strategy Alt is currently generating about 0.28 per unit of risk. If you would invest  3,401  in M Large Cap on May 18, 2025 and sell it today you would earn a total of  325.00  from holding M Large Cap or generate 9.56% return on investment over 90 days.

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

M Large Cap  vs.  Fs Multi Strategy Alt

M Large Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in M Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, M Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fs Multi Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fs Multi Strategy Alt are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fs Multi-strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with M Large and Fs Multi-strategy

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

The idea behind M Large Cap and Fs Multi Strategy Alt 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.