Correlation Between FC Investment and Malvern International

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

Diversification Opportunities for FC Investment and Malvern International

0.41

Correlation Coefficient

FC Investment  Malvern International

Very weak diversification

The 3 months correlation between FCIT and Malvern is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Malvern International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malvern International 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 Malvern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malvern International has no effect on the direction of FC Investment i.e., FC Investment and Malvern International go up and down completely randomly.

Pair Corralation between FC Investment and Malvern International

Assuming the 90 days trading horizon FC Investment Trust is expected to under-perform the Malvern International. But the stock apears to be less risky and, when comparing its historical volatility, FC Investment Trust is 2.12 times less risky than Malvern International. The stock trades about -0.01 of its potential returns per unit of risk. The Malvern International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,950  in Malvern International on December 23, 2024 and sell it today you would earn a total of  125.00  from holding Malvern International or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FC Investment Trust  vs.  Malvern International

FC Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days FC Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FC Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Malvern International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malvern International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Malvern International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FC Investment and Malvern International

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

The idea behind FC Investment Trust and Malvern International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.