Correlation Between Balfour Beatty and FC Investment
Can any of the company-specific risk be diversified away by investing in both Balfour Beatty and FC Investment 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 Balfour Beatty and FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balfour Beatty plc and FC Investment Trust, you can compare the effects of market volatilities on Balfour Beatty and FC Investment 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 Balfour Beatty with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balfour Beatty and FC Investment.
Diversification Opportunities for Balfour Beatty and FC Investment
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balfour and FCIT is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Balfour Beatty plc and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust and Balfour Beatty 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 Balfour Beatty plc are associated (or correlated) with FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Balfour Beatty i.e., Balfour Beatty and FC Investment go up and down completely randomly.
Pair Corralation between Balfour Beatty and FC Investment
Assuming the 90 days trading horizon Balfour Beatty is expected to generate 1.08 times less return on investment than FC Investment. In addition to that, Balfour Beatty is 1.83 times more volatile than FC Investment Trust. It trades about 0.14 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.27 per unit of volatility. If you would invest 101,246 in FC Investment Trust on September 12, 2024 and sell it today you would earn a total of 12,354 from holding FC Investment Trust or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balfour Beatty plc vs. FC Investment Trust
Performance |
| Timeline |
| Balfour Beatty plc |
| FC Investment Trust |
Balfour Beatty and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balfour Beatty and FC Investment
The main advantage of trading using opposite Balfour Beatty and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balfour Beatty position performs unexpectedly, FC Investment 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 FC Investment will offset losses from the drop in FC Investment's long position.| Balfour Beatty vs. Park Hotels Resorts | Balfour Beatty vs. InterContinental Hotels Group | Balfour Beatty vs. Allianz Technology Trust | Balfour Beatty vs. Applied Materials |
| FC Investment vs. UNIQA Insurance Group | FC Investment vs. Zurich Insurance Group | FC Investment vs. Axfood AB | FC Investment vs. European Metals Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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