Correlation Between FC Investment and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both FC Investment and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on FC Investment and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Lindsell Train.
Diversification Opportunities for FC Investment and Lindsell Train
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FCIT and Lindsell is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of FC Investment i.e., FC Investment and Lindsell Train go up and down completely randomly.
Pair Corralation between FC Investment and Lindsell Train
Assuming the 90 days trading horizon FC Investment Trust is expected to under-perform the Lindsell Train. But the stock apears to be less risky and, when comparing its historical volatility, FC Investment Trust is 1.28 times less risky than Lindsell Train. The stock trades about -0.02 of its potential returns per unit of risk. The Lindsell Train Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 84,400 in Lindsell Train Investment on November 28, 2024 and sell it today you would earn a total of 600.00 from holding Lindsell Train Investment or generate 0.71% 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. Lindsell Train Investment
Performance |
| Timeline |
| FC Investment Trust |
| Lindsell Train Investment |
FC Investment and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Lindsell Train
The main advantage of trading using opposite FC Investment and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| FC Investment vs. Omega Healthcare Investors | FC Investment vs. Synthomer plc | FC Investment vs. Fortune Brands Home | FC Investment vs. HCA Healthcare |
| Lindsell Train vs. Central Asia Metals | Lindsell Train vs. JD Sports Fashion | Lindsell Train vs. Associated British Foods | Lindsell Train vs. AfriTin Mining |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |