Correlation Between Flow Capital and 3i Group
Can any of the company-specific risk be diversified away by investing in both Flow Capital and 3i Group 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 Flow Capital and 3i Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Capital Corp and 3i Group plc, you can compare the effects of market volatilities on Flow Capital and 3i Group 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 Flow Capital with a short position of 3i Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Capital and 3i Group.
Diversification Opportunities for Flow Capital and 3i Group
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flow and TGOPF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and 3i Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3i Group plc and Flow Capital 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 Flow Capital Corp are associated (or correlated) with 3i Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3i Group plc has no effect on the direction of Flow Capital i.e., Flow Capital and 3i Group go up and down completely randomly.
Pair Corralation between Flow Capital and 3i Group
Assuming the 90 days horizon Flow Capital Corp is expected to generate 1.66 times more return on investment than 3i Group. However, Flow Capital is 1.66 times more volatile than 3i Group plc. It trades about 0.11 of its potential returns per unit of risk. 3i Group plc is currently generating about 0.11 per unit of risk. If you would invest 38.00 in Flow Capital Corp on September 3, 2024 and sell it today you would earn a total of 23.00 from holding Flow Capital Corp or generate 60.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.58% |
| Values | Daily Returns |
Flow Capital Corp vs. 3i Group plc
Performance |
| Timeline |
| Flow Capital Corp |
| 3i Group plc |
Flow Capital and 3i Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Capital and 3i Group
The main advantage of trading using opposite Flow Capital and 3i Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Capital position performs unexpectedly, 3i Group 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 3i Group will offset losses from the drop in 3i Group's long position.| Flow Capital vs. Guardian Capital Group | Flow Capital vs. Urbana | Flow Capital vs. Princeton Capital | Flow Capital vs. Blackhawk Growth Corp |
| 3i Group vs. Partners Group | 3i Group vs. Burford Capital | 3i Group vs. PennantPark Investment | 3i Group vs. 3i Group PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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