Correlation Between FC Investment and GoldMining
Can any of the company-specific risk be diversified away by investing in both FC Investment and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on FC Investment and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and GoldMining.
Diversification Opportunities for FC Investment and GoldMining
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between FCIT and GoldMining is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of FC Investment i.e., FC Investment and GoldMining go up and down completely randomly.
Pair Corralation between FC Investment and GoldMining
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.21 times more return on investment than GoldMining. However, FC Investment Trust is 4.7 times less risky than GoldMining. It trades about 0.06 of its potential returns per unit of risk. GoldMining is currently generating about -0.02 per unit of risk. If you would invest 90,093 in FC Investment Trust on August 31, 2024 and sell it today you would earn a total of 22,107 from holding FC Investment Trust or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.23% |
| Values | Daily Returns |
FC Investment Trust vs. GoldMining
Performance |
| Timeline |
| FC Investment Trust |
| GoldMining |
FC Investment and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and GoldMining
The main advantage of trading using opposite FC Investment and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| FC Investment vs. Alaska Air Group | FC Investment vs. DXC Technology Co | FC Investment vs. Porvair plc | FC Investment vs. AIM ImmunoTech |
| GoldMining vs. New Residential Investment | GoldMining vs. The Mercantile Investment | GoldMining vs. FC Investment Trust | GoldMining vs. Compal Electronics GDR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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