Correlation Between FC Investment and Hornby PLC
Can any of the company-specific risk be diversified away by investing in both FC Investment and Hornby PLC 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 Hornby PLC 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 Hornby PLC, you can compare the effects of market volatilities on FC Investment and Hornby PLC 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 Hornby PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Hornby PLC.
Diversification Opportunities for FC Investment and Hornby PLC
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FCIT and Hornby is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Hornby PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hornby PLC 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 Hornby PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hornby PLC has no effect on the direction of FC Investment i.e., FC Investment and Hornby PLC go up and down completely randomly.
Pair Corralation between FC Investment and Hornby PLC
Assuming the 90 days trading horizon FC Investment is expected to generate 1.83 times less return on investment than Hornby PLC. But when comparing it to its historical volatility, FC Investment Trust is 10.33 times less risky than Hornby PLC. It trades about 0.44 of its potential returns per unit of risk. Hornby PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Hornby PLC on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Hornby PLC or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
FC Investment Trust vs. Hornby PLC
Performance |
| Timeline |
| FC Investment Trust |
| Hornby PLC |
FC Investment and Hornby PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Hornby PLC
The main advantage of trading using opposite FC Investment and Hornby PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Hornby PLC 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 Hornby PLC will offset losses from the drop in Hornby PLC's long position.| FC Investment vs. Samsung Electronics Co | FC Investment vs. Samsung Electronics Co | FC Investment vs. Hyundai Motor | FC Investment vs. Toyota Motor Corp |
| Hornby PLC vs. JPMorgan Global Emerging | Hornby PLC vs. Smithson Investment Trust | Hornby PLC vs. Oakley Capital Investments | Hornby PLC vs. FC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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