Correlation Between FC Investment and Guaranty Trust

Can any of the company-specific risk be diversified away by investing in both FC Investment and Guaranty Trust 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 Guaranty Trust 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 Guaranty Trust Holding, you can compare the effects of market volatilities on FC Investment and Guaranty Trust 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 Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Guaranty Trust.

Diversification Opportunities for FC Investment and Guaranty Trust

0.06

Correlation Coefficient

FC Investment  Guaranty Trust

Significant diversification

The 3 months correlation between FCIT and Guaranty is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding 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 Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of FC Investment i.e., FC Investment and Guaranty Trust go up and down completely randomly.

Pair Corralation between FC Investment and Guaranty Trust

Assuming the 90 days trading horizon FC Investment is expected to generate 1.96 times less return on investment than Guaranty Trust. But when comparing it to its historical volatility, FC Investment Trust is 2.98 times less risky than Guaranty Trust. It trades about 0.27 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  171.00  in Guaranty Trust Holding on October 25, 2024 and sell it today you would earn a total of  43.00  from holding Guaranty Trust Holding or generate 25.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

FC Investment Trust  vs.  Guaranty Trust Holding

FC Investment Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FC Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Guaranty Trust Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FC Investment and Guaranty Trust

The main advantage of trading using opposite FC Investment and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.

The idea behind FC Investment Trust and Guaranty Trust Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.