Correlation Between BT Group and FC Investment
Can any of the company-specific risk be diversified away by investing in both BT Group 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 BT Group and FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BT Group Plc and FC Investment Trust, you can compare the effects of market volatilities on BT Group 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 BT Group with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Group and FC Investment.
Diversification Opportunities for BT Group and FC Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BT-A and FCIT is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BT Group 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 BT Group 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 BT Group 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 BT Group i.e., BT Group and FC Investment go up and down completely randomly.
Pair Corralation between BT Group and FC Investment
Assuming the 90 days trading horizon BT Group Plc is expected to generate 2.69 times more return on investment than FC Investment. However, BT Group is 2.69 times more volatile than FC Investment Trust. It trades about 0.33 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.46 per unit of risk. If you would invest 13,825 in BT Group Plc on September 1, 2024 and sell it today you would earn a total of 2,105 from holding BT Group Plc or generate 15.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BT Group Plc vs. FC Investment Trust
Performance |
| Timeline |
| BT Group Plc |
| FC Investment Trust |
BT Group and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BT Group and FC Investment
The main advantage of trading using opposite BT Group and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BT Group 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.| BT Group vs. Bloomsbury Publishing Plc | BT Group vs. Bytes Technology | BT Group vs. Spotify Technology SA | BT Group vs. JB Hunt Transport |
| FC Investment vs. Toyota Motor Corp | FC Investment vs. SoftBank Group Corp | FC Investment vs. OTP Bank Nyrt | FC Investment vs. Las Vegas Sands |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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