Correlation Between Fpa Crescent and Mairs Power

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

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

Diversification Opportunities for Fpa Crescent and Mairs Power

0.83

Correlation Coefficient

Fpa Crescent  Mairs Power

Very poor diversification

The 3 months correlation between Fpa and Mairs is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fpa Crescent Fund and Mairs Power Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Small and Fpa Crescent 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 Fpa Crescent Fund are associated (or correlated) with Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Small has no effect on the direction of Fpa Crescent i.e., Fpa Crescent and Mairs Power go up and down completely randomly.

Pair Corralation between Fpa Crescent and Mairs Power

Assuming the 90 days horizon Fpa Crescent is expected to generate 1.27 times less return on investment than Mairs Power. But when comparing it to its historical volatility, Fpa Crescent Fund is 2.2 times less risky than Mairs Power. It trades about 0.09 of its potential returns per unit of risk. Mairs Power Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,715  in Mairs Power Small on September 12, 2024 and sell it today you would earn a total of  602.00  from holding Mairs Power Small or generate 22.17% return on investment over 90 days.

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

Fpa Crescent Fund  vs.  Mairs Power Small

Fpa Crescent

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa Crescent Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fpa Crescent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mairs Power Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mairs Power Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mairs Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fpa Crescent and Mairs Power

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

The idea behind Fpa Crescent Fund and Mairs Power Small 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.