Correlation Between FC Investment and Investment
Can any of the company-specific risk be diversified away by investing in both FC Investment and 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 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 The Investment, you can compare the effects of market volatilities on FC Investment and 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Investment.
Diversification Opportunities for FC Investment and Investment
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FCIT and Investment is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of FC Investment i.e., FC Investment and Investment go up and down completely randomly.
Pair Corralation between FC Investment and Investment
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.9 times more return on investment than Investment. However, FC Investment Trust is 1.12 times less risky than Investment. It trades about 0.1 of its potential returns per unit of risk. The Investment is currently generating about 0.05 per unit of risk. If you would invest 86,237 in FC Investment Trust on August 26, 2024 and sell it today you would earn a total of 25,963 from holding FC Investment Trust or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
FC Investment Trust vs. The Investment
Performance |
| Timeline |
| FC Investment Trust |
| Investment |
FC Investment and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Investment
The main advantage of trading using opposite FC Investment and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, 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 Investment will offset losses from the drop in Investment's long position.| FC Investment vs. Centaur Media | FC Investment vs. Samsung Electronics Co | FC Investment vs. Arrow Electronics | FC Investment vs. Catalyst Media Group |
| Investment vs. Uniper SE | Investment vs. Mulberry Group PLC | Investment vs. London Security Plc | Investment vs. Triad Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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