Correlation Between FC Investment and Herald Investment
Can any of the company-specific risk be diversified away by investing in both FC Investment and Herald 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 FC Investment and Herald Investment 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 Herald Investment Trust, you can compare the effects of market volatilities on FC Investment and Herald 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 FC Investment with a short position of Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Herald Investment.
Diversification Opportunities for FC Investment and Herald Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FCIT and Herald is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of FC Investment i.e., FC Investment and Herald Investment go up and down completely randomly.
Pair Corralation between FC Investment and Herald Investment
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.75 times more return on investment than Herald Investment. However, FC Investment Trust is 1.34 times less risky than Herald Investment. It trades about 0.19 of its potential returns per unit of risk. Herald Investment Trust is currently generating about 0.12 per unit of risk. If you would invest 102,840 in FC Investment Trust on August 29, 2024 and sell it today you would earn a total of 9,560 from holding FC Investment Trust or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Herald Investment Trust
Performance |
| Timeline |
| FC Investment Trust |
| Herald Investment Trust |
FC Investment and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Herald Investment
The main advantage of trading using opposite FC Investment and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Herald 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| FC Investment vs. Toyota Motor Corp | FC Investment vs. Lendinvest PLC | FC Investment vs. Neometals | FC Investment vs. Coor Service Management |
| Herald Investment vs. Toyota Motor Corp | Herald Investment vs. Lendinvest PLC | Herald Investment vs. Neometals | Herald Investment vs. Coor Service Management |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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