Correlation Between Financial Industries and Ambrus Core

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

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

Diversification Opportunities for Financial Industries and Ambrus Core

-0.73

Correlation Coefficient

Financial Industries  Ambrus Core

Pay attention - limited upside

The 3 months correlation between Financial and Ambrus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Ambrus Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambrus Core Bond and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Ambrus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambrus Core Bond has no effect on the direction of Financial Industries i.e., Financial Industries and Ambrus Core go up and down completely randomly.

Pair Corralation between Financial Industries and Ambrus Core

Assuming the 90 days horizon Financial Industries Fund is expected to generate 7.66 times more return on investment than Ambrus Core. However, Financial Industries is 7.66 times more volatile than Ambrus Core Bond. It trades about 0.2 of its potential returns per unit of risk. Ambrus Core Bond is currently generating about -0.01 per unit of risk. If you would invest  1,805  in Financial Industries Fund on August 31, 2024 and sell it today you would earn a total of  322.00  from holding Financial Industries Fund or generate 17.84% return on investment over 90 days.

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

Financial Industries Fund  vs.  Ambrus Core Bond

Financial Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Financial Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Ambrus Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Financial Industries and Ambrus Core

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

The idea behind Financial Industries Fund and Ambrus Core Bond 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.