Correlation Between FC Investment and Monks Investment
Can any of the company-specific risk be diversified away by investing in both FC Investment and Monks 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 Monks 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 Monks Investment Trust, you can compare the effects of market volatilities on FC Investment and Monks 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Monks Investment.
Diversification Opportunities for FC Investment and Monks Investment
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FCIT and Monks is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of FC Investment i.e., FC Investment and Monks Investment go up and down completely randomly.
Pair Corralation between FC Investment and Monks Investment
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.77 times more return on investment than Monks Investment. However, FC Investment Trust is 1.29 times less risky than Monks Investment. It trades about -0.01 of its potential returns per unit of risk. Monks Investment Trust is currently generating about -0.07 per unit of risk. If you would invest 112,000 in FC Investment Trust on September 26, 2024 and sell it today you would lose (200.00) from holding FC Investment Trust or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Monks Investment Trust
Performance |
| Timeline |
| FC Investment Trust |
| Monks Investment Trust |
FC Investment and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Monks Investment
The main advantage of trading using opposite FC Investment and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Monks 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 Monks Investment will offset losses from the drop in Monks Investment'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 |
| Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Hyundai Motor | Monks Investment vs. Toyota Motor Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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