Correlation Between FC Investment and Applied Materials
Can any of the company-specific risk be diversified away by investing in both FC Investment and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on FC Investment and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Applied Materials.
Diversification Opportunities for FC Investment and Applied Materials
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FCIT and Applied is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of FC Investment i.e., FC Investment and Applied Materials go up and down completely randomly.
Pair Corralation between FC Investment and Applied Materials
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.27 times more return on investment than Applied Materials. However, FC Investment Trust is 3.71 times less risky than Applied Materials. It trades about 0.2 of its potential returns per unit of risk. Applied Materials is currently generating about -0.05 per unit of risk. If you would invest 102,441 in FC Investment Trust on August 30, 2024 and sell it today you would earn a total of 9,959 from holding FC Investment Trust or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Applied Materials
Performance |
| Timeline |
| FC Investment Trust |
| Applied Materials |
FC Investment and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Applied Materials
The main advantage of trading using opposite FC Investment and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| FC Investment vs. Alaska Air Group | FC Investment vs. DXC Technology Co | FC Investment vs. Porvair plc | FC Investment vs. AIM ImmunoTech |
| Applied Materials vs. Hochschild Mining plc | Applied Materials vs. Check Point Software | Applied Materials vs. Accsys Technologies PLC | Applied Materials vs. Gaming Realms plc |
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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