Correlation Between FC Investment and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both FC Investment and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on FC Investment and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Livermore Investments.
Diversification Opportunities for FC Investment and Livermore Investments
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FCIT and Livermore is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of FC Investment i.e., FC Investment and Livermore Investments go up and down completely randomly.
Pair Corralation between FC Investment and Livermore Investments
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 1.08 times more return on investment than Livermore Investments. However, FC Investment is 1.08 times more volatile than Livermore Investments Group. It trades about 0.34 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.13 per unit of risk. If you would invest 105,600 in FC Investment Trust on August 29, 2024 and sell it today you would earn a total of 6,600 from holding FC Investment Trust or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Livermore Investments Group
Performance |
| Timeline |
| FC Investment Trust |
| Livermore Investments |
FC Investment and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Livermore Investments
The main advantage of trading using opposite FC Investment and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| FC Investment vs. Toyota Motor Corp | FC Investment vs. Lendinvest PLC | FC Investment vs. Neometals | FC Investment vs. Coor Service Management |
| Livermore Investments vs. Toyota Motor Corp | Livermore Investments vs. Lendinvest PLC | Livermore Investments vs. Neometals | Livermore Investments 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 CEOs Directory module to screen CEOs from public companies around the world.
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