Correlation Between FC Investment and Legal General
Can any of the company-specific risk be diversified away by investing in both FC Investment and Legal General 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 Legal General 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 Legal General Group, you can compare the effects of market volatilities on FC Investment and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Legal General.
Diversification Opportunities for FC Investment and Legal General
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FCIT and Legal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of FC Investment i.e., FC Investment and Legal General go up and down completely randomly.
Pair Corralation between FC Investment and Legal General
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.83 times more return on investment than Legal General. However, FC Investment Trust is 1.21 times less risky than Legal General. It trades about 0.34 of its potential returns per unit of risk. Legal General Group is currently generating about 0.03 per unit of risk. If you would invest 105,600 in FC Investment Trust on August 28, 2024 and sell it today you would earn a total of 6,400 from holding FC Investment Trust or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Legal General Group
Performance |
| Timeline |
| FC Investment Trust |
| Legal General Group |
FC Investment and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Legal General
The main advantage of trading using opposite FC Investment and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| FC Investment vs. Catalyst Media Group | FC Investment vs. Oncimmune Holdings plc | FC Investment vs. Invesco Health Care | FC Investment vs. Coor Service Management |
| Legal General vs. Planet Fitness Cl | Legal General vs. Orient Telecoms | Legal General vs. Universal Display Corp | Legal General vs. Zegona Communications 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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