Correlation Between Livermore Investments and FC Investment
Can any of the company-specific risk be diversified away by investing in both Livermore Investments and FC 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 Livermore Investments and FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and FC Investment Trust, you can compare the effects of market volatilities on Livermore Investments and FC 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 Livermore Investments with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and FC Investment.
Diversification Opportunities for Livermore Investments and FC Investment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Livermore and FCIT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Livermore Investments i.e., Livermore Investments and FC Investment go up and down completely randomly.
Pair Corralation between Livermore Investments and FC Investment
Assuming the 90 days trading horizon Livermore Investments is expected to generate 2.95 times less return on investment than FC Investment. But when comparing it to its historical volatility, Livermore Investments Group is 1.08 times less risky than FC Investment. It trades about 0.13 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 105,600 in FC Investment Trust on August 29, 2024 and sell it today you would earn a total of 6,600 from holding FC Investment Trust or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. FC Investment Trust
Performance |
| Timeline |
| Livermore Investments |
| FC Investment Trust |
Livermore Investments and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and FC Investment
The main advantage of trading using opposite Livermore Investments and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments position performs unexpectedly, FC 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 FC Investment will offset losses from the drop in FC Investment's long position.| Livermore Investments vs. Toyota Motor Corp | Livermore Investments vs. Lendinvest PLC | Livermore Investments vs. Neometals | Livermore Investments vs. Coor Service Management |
| FC Investment vs. Toyota Motor Corp | FC Investment vs. Lendinvest PLC | FC Investment vs. Neometals | FC Investment vs. Coor Service 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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