Correlation Between FC Investment and PureTech Health
Can any of the company-specific risk be diversified away by investing in both FC Investment and PureTech Health 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 PureTech Health 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 PureTech Health plc, you can compare the effects of market volatilities on FC Investment and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and PureTech Health.
Diversification Opportunities for FC Investment and PureTech Health
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FCIT and PureTech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of FC Investment i.e., FC Investment and PureTech Health go up and down completely randomly.
Pair Corralation between FC Investment and PureTech Health
Assuming the 90 days trading horizon FC Investment is expected to generate 1.08 times less return on investment than PureTech Health. But when comparing it to its historical volatility, FC Investment Trust is 3.8 times less risky than PureTech Health. It trades about 0.44 of its potential returns per unit of risk. PureTech Health plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 15,600 in PureTech Health plc on August 31, 2024 and sell it today you would earn a total of 1,100 from holding PureTech Health plc or generate 7.05% 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. PureTech Health plc
Performance |
| Timeline |
| FC Investment Trust |
| PureTech Health plc |
FC Investment and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and PureTech Health
The main advantage of trading using opposite FC Investment and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| FC Investment vs. Alaska Air Group | FC Investment vs. DXC Technology Co | FC Investment vs. Porvair plc | FC Investment vs. AIM ImmunoTech |
| PureTech Health vs. JD Sports Fashion | PureTech Health vs. Albion Technology General | PureTech Health vs. Accsys Technologies PLC | PureTech Health vs. Wyndham Hotels Resorts |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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