Correlation Between FTI Consulting and Thomson Reuters
Can any of the company-specific risk be diversified away by investing in both FTI Consulting and Thomson Reuters 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 FTI Consulting and Thomson Reuters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTI Consulting and Thomson Reuters Corp, you can compare the effects of market volatilities on FTI Consulting and Thomson Reuters 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 FTI Consulting with a short position of Thomson Reuters. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTI Consulting and Thomson Reuters.
Diversification Opportunities for FTI Consulting and Thomson Reuters
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FTI and Thomson is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FTI Consulting and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp and FTI Consulting 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 FTI Consulting are associated (or correlated) with Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of FTI Consulting i.e., FTI Consulting and Thomson Reuters go up and down completely randomly.
Pair Corralation between FTI Consulting and Thomson Reuters
Considering the 90-day investment horizon FTI Consulting is expected to generate 2.85 times less return on investment than Thomson Reuters. In addition to that, FTI Consulting is 1.65 times more volatile than Thomson Reuters Corp. It trades about 0.02 of its total potential returns per unit of risk. Thomson Reuters Corp is currently generating about 0.08 per unit of volatility. If you would invest 11,613 in Thomson Reuters Corp on August 31, 2024 and sell it today you would earn a total of 4,646 from holding Thomson Reuters Corp or generate 40.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTI Consulting vs. Thomson Reuters Corp
Performance |
| Timeline |
| FTI Consulting |
| Thomson Reuters Corp |
FTI Consulting and Thomson Reuters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTI Consulting and Thomson Reuters
The main advantage of trading using opposite FTI Consulting and Thomson Reuters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTI Consulting position performs unexpectedly, Thomson Reuters 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 Thomson Reuters will offset losses from the drop in Thomson Reuters' long position.| FTI Consulting vs. CRA International | FTI Consulting vs. Huron Consulting Group | FTI Consulting vs. Forrester Research | FTI Consulting vs. Exponent |
| Thomson Reuters vs. Rentokil Initial PLC | Thomson Reuters vs. Performant Financial | Thomson Reuters vs. Cass Information Systems | Thomson Reuters vs. Maximus |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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