Correlation Between BH Macro and FC Investment
Can any of the company-specific risk be diversified away by investing in both BH Macro 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 BH Macro and FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BH Macro Limited and FC Investment Trust, you can compare the effects of market volatilities on BH Macro 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 BH Macro with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BH Macro and FC Investment.
Diversification Opportunities for BH Macro and FC Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BHMU and FCIT is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BH Macro Limited 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 BH Macro 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 BH Macro Limited 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 BH Macro i.e., BH Macro and FC Investment go up and down completely randomly.
Pair Corralation between BH Macro and FC Investment
Assuming the 90 days trading horizon BH Macro Limited is expected to generate 1.74 times more return on investment than FC Investment. However, BH Macro is 1.74 times more volatile than FC Investment Trust. It trades about 0.22 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.34 per unit of risk. If you would invest 382.00 in BH Macro Limited on August 29, 2024 and sell it today you would earn a total of 26.00 from holding BH Macro Limited or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BH Macro Limited vs. FC Investment Trust
Performance |
| Timeline |
| BH Macro Limited |
| FC Investment Trust |
BH Macro and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BH Macro and FC Investment
The main advantage of trading using opposite BH Macro and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BH Macro 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.| BH Macro vs. Toyota Motor Corp | BH Macro vs. Lendinvest PLC | BH Macro vs. Neometals | BH Macro vs. Coor Service Management |
| FC Investment vs. Toyota Motor Corp | FC Investment vs. Lendinvest PLC | FC Investment vs. Neometals | FC Investment vs. Coor Service Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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