Correlation Between Fundamental Indexplus and Stocksplus

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

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

Diversification Opportunities for Fundamental Indexplus and Stocksplus

-0.97

Correlation Coefficient

Fundamental Indexplus  Stocksplus

Pay attention - limited upside

The 3 months correlation between Fundamental and Stocksplus is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Indexplus Tr and Stocksplus Tr Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Tr Short and Fundamental Indexplus 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 Fundamental Indexplus Tr are associated (or correlated) with Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Tr Short has no effect on the direction of Fundamental Indexplus i.e., Fundamental Indexplus and Stocksplus go up and down completely randomly.

Pair Corralation between Fundamental Indexplus and Stocksplus

Assuming the 90 days horizon Fundamental Indexplus Tr is expected to generate 1.24 times more return on investment than Stocksplus. However, Fundamental Indexplus is 1.24 times more volatile than Stocksplus Tr Short. It trades about 0.21 of its potential returns per unit of risk. Stocksplus Tr Short is currently generating about -0.24 per unit of risk. If you would invest  1,803  in Fundamental Indexplus Tr on May 1, 2025 and sell it today you would earn a total of  214.00  from holding Fundamental Indexplus Tr or generate 11.87% return on investment over 90 days.

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

Fundamental Indexplus Tr  vs.  Stocksplus Tr Short

Fundamental Indexplus

Risk-Adjusted Performance

Solid

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

Stocksplus Tr Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stocksplus Tr Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fundamental Indexplus and Stocksplus

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

The idea behind Fundamental Indexplus Tr and Stocksplus Tr Short 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.