Correlation Between FSA and MFF Capital
Can any of the company-specific risk be diversified away by investing in both FSA and MFF Capital 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 FSA and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and MFF Capital Investments, you can compare the effects of market volatilities on FSA and MFF Capital 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 FSA with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and MFF Capital.
Diversification Opportunities for FSA and MFF Capital
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FSA and MFF is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and FSA 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 FSA Group are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of FSA i.e., FSA and MFF Capital go up and down completely randomly.
Pair Corralation between FSA and MFF Capital
Assuming the 90 days trading horizon FSA Group is expected to generate 1.89 times more return on investment than MFF Capital. However, FSA is 1.89 times more volatile than MFF Capital Investments. It trades about 0.07 of its potential returns per unit of risk. MFF Capital Investments is currently generating about -0.27 per unit of risk. If you would invest 84.00 in FSA Group on November 27, 2024 and sell it today you would earn a total of 2.00 from holding FSA Group or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. MFF Capital Investments
Performance |
| Timeline |
| FSA Group |
| MFF Capital Investments |
FSA and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and MFF Capital
The main advantage of trading using opposite FSA and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| FSA vs. Ramsay Health Care | FSA vs. Oneview Healthcare PLC | FSA vs. Cleanaway Waste Management | FSA vs. Clime Investment Management |
| MFF Capital vs. Mirrabooka Investments | MFF Capital vs. Treasury Wine Estates | MFF Capital vs. Viva Leisure | MFF Capital vs. Pinnacle Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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