Correlation Between FC Investment and LBG Media
Can any of the company-specific risk be diversified away by investing in both FC Investment and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on FC Investment and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and LBG Media.
Diversification Opportunities for FC Investment and LBG Media
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FCIT and LBG is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of FC Investment i.e., FC Investment and LBG Media go up and down completely randomly.
Pair Corralation between FC Investment and LBG Media
Assuming the 90 days trading horizon FC Investment is expected to generate 1.72 times less return on investment than LBG Media. But when comparing it to its historical volatility, FC Investment Trust is 3.17 times less risky than LBG Media. It trades about 0.06 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,850 in LBG Media PLC on September 11, 2024 and sell it today you would earn a total of 2,950 from holding LBG Media PLC or generate 33.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
FC Investment Trust vs. LBG Media PLC
Performance |
Timeline |
FC Investment Trust |
LBG Media PLC |
FC Investment and LBG Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FC Investment and LBG Media
The main advantage of trading using opposite FC Investment and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.FC Investment vs. Samsung Electronics Co | FC Investment vs. Samsung Electronics Co | FC Investment vs. Hyundai Motor | FC Investment vs. Toyota Motor Corp |
LBG Media vs. Evolution Gaming Group | LBG Media vs. Futura Medical | LBG Media vs. Broadcom | LBG Media vs. Hochschild Mining plc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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