Correlation Between Stocksplus Total and Fundamental Indexplus

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

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

Diversification Opportunities for Stocksplus Total and Fundamental Indexplus

0.95

Correlation Coefficient

Stocksplus Total  Fundamental Indexplus

Almost no diversification

The 3 months correlation between STOCKSPLUS and Fundamental is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stocksplus Total Return and Fundamental Indexplus Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Indexplus and Stocksplus Total 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 Stocksplus Total Return are associated (or correlated) with Fundamental Indexplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Indexplus has no effect on the direction of Stocksplus Total i.e., Stocksplus Total and Fundamental Indexplus go up and down completely randomly.

Pair Corralation between Stocksplus Total and Fundamental Indexplus

Assuming the 90 days horizon Stocksplus Total Return is expected to generate 0.88 times more return on investment than Fundamental Indexplus. However, Stocksplus Total Return is 1.13 times less risky than Fundamental Indexplus. It trades about 0.21 of its potential returns per unit of risk. Fundamental Indexplus Tr is currently generating about 0.13 per unit of risk. If you would invest  1,181  in Stocksplus Total Return on May 15, 2025 and sell it today you would earn a total of  108.00  from holding Stocksplus Total Return or generate 9.14% return on investment over 90 days.

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

Stocksplus Total Return  vs.  Fundamental Indexplus Tr

Stocksplus Total Return

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stocksplus Total Return are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Stocksplus Total may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fundamental Indexplus

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Indexplus Tr are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fundamental Indexplus may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Stocksplus Total and Fundamental Indexplus

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

The idea behind Stocksplus Total Return and Fundamental Indexplus Tr 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.