Correlation Between FC Investment and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both FC Investment and Ameren Corp 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 FC Investment and Ameren Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Ameren Corp, you can compare the effects of market volatilities on FC Investment and Ameren Corp 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 FC Investment with a short position of Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Ameren Corp.
Diversification Opportunities for FC Investment and Ameren Corp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FCIT and Ameren is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and FC Investment 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 FC Investment Trust are associated (or correlated) with Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of FC Investment i.e., FC Investment and Ameren Corp go up and down completely randomly.
Pair Corralation between FC Investment and Ameren Corp
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.7 times more return on investment than Ameren Corp. However, FC Investment Trust is 1.43 times less risky than Ameren Corp. It trades about 0.06 of its potential returns per unit of risk. Ameren Corp is currently generating about 0.03 per unit of risk. If you would invest 94,320 in FC Investment Trust on October 23, 2024 and sell it today you would earn a total of 23,280 from holding FC Investment Trust or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.18% |
| Values | Daily Returns |
FC Investment Trust vs. Ameren Corp
Performance |
| Timeline |
| FC Investment Trust |
| Ameren Corp |
FC Investment and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Ameren Corp
The main advantage of trading using opposite FC Investment and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| FC Investment vs. Catalyst Media Group | FC Investment vs. CATLIN GROUP | FC Investment vs. Tamburi Investment Partners | FC Investment vs. Magnora ASA |
| Ameren Corp vs. Arrow Electronics | Ameren Corp vs. Broadcom | Ameren Corp vs. Fidelity National Information | Ameren Corp vs. Rosslyn Data Technologies |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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