Correlation Between European Metals and FC Investment
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and FC Investment Trust, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and FC Investment.
Diversification Opportunities for European Metals and FC Investment
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and FCIT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and FC Investment go up and down completely randomly.
Pair Corralation between European Metals and FC Investment
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the FC Investment. In addition to that, European Metals is 3.32 times more volatile than FC Investment Trust. It trades about -0.22 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.15 per unit of volatility. If you would invest 111,200 in FC Investment Trust on September 13, 2024 and sell it today you would earn a total of 2,000 from holding FC Investment Trust or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. FC Investment Trust
Performance |
| Timeline |
| European Metals Holdings |
| FC Investment Trust |
European Metals and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and FC Investment
The main advantage of trading using opposite European Metals and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Ferrexpo PLC | European Metals vs. Atalaya Mining |
| FC Investment vs. Allianz Technology Trust | FC Investment vs. Public Storage | FC Investment vs. Ion Beam Applications | FC Investment vs. Check Point Software |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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