Correlation Between FC Investment and SMA Solar
Can any of the company-specific risk be diversified away by investing in both FC Investment and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on FC Investment and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and SMA Solar.
Diversification Opportunities for FC Investment and SMA Solar
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FCIT and SMA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of FC Investment i.e., FC Investment and SMA Solar go up and down completely randomly.
Pair Corralation between FC Investment and SMA Solar
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.18 times more return on investment than SMA Solar. However, FC Investment Trust is 5.51 times less risky than SMA Solar. It trades about 0.15 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.02 per unit of risk. If you would invest 105,257 in FC Investment Trust on October 12, 2024 and sell it today you would earn a total of 7,343 from holding FC Investment Trust or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. SMA Solar Technology
Performance |
| Timeline |
| FC Investment Trust |
| SMA Solar Technology |
FC Investment and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and SMA Solar
The main advantage of trading using opposite FC Investment and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| FC Investment vs. Jacquet Metal Service | FC Investment vs. New Residential Investment | FC Investment vs. Primorus Investments plc | FC Investment vs. Gaztransport et Technigaz |
| SMA Solar vs. Golden Metal Resources | SMA Solar vs. Vienna Insurance Group | SMA Solar vs. FC Investment Trust | SMA Solar vs. Monks Investment Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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