Correlation Between TMT Investments and FC Investment
Can any of the company-specific risk be diversified away by investing in both TMT 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 TMT 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 TMT Investments PLC and FC Investment Trust, you can compare the effects of market volatilities on TMT 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 TMT Investments with a short position of FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Investments and FC Investment.
Diversification Opportunities for TMT Investments and FC Investment
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TMT and FCIT is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC 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 TMT 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 TMT Investments PLC 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 TMT Investments i.e., TMT Investments and FC Investment go up and down completely randomly.
Pair Corralation between TMT Investments and FC Investment
Assuming the 90 days trading horizon TMT Investments is expected to generate 4.98 times less return on investment than FC Investment. In addition to that, TMT Investments is 2.53 times more volatile than FC Investment Trust. It trades about 0.01 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.1 per unit of volatility. If you would invest 86,237 in FC Investment Trust on August 26, 2024 and sell it today you would earn a total of 25,963 from holding FC Investment Trust or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
TMT Investments PLC vs. FC Investment Trust
Performance |
| Timeline |
| TMT Investments PLC |
| FC Investment Trust |
TMT Investments and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Investments and FC Investment
The main advantage of trading using opposite TMT Investments and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT 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.| TMT Investments vs. Retail Estates NV | TMT Investments vs. Ross Stores | TMT Investments vs. Tatton Asset Management | TMT Investments vs. Litigation Capital Management |
| FC Investment vs. Centaur Media | FC Investment vs. Samsung Electronics Co | FC Investment vs. Arrow Electronics | FC Investment vs. Catalyst Media Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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