Correlation Between FC Investment and SANTANDER

Can any of the company-specific risk be diversified away by investing in both FC Investment and SANTANDER 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 SANTANDER 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 SANTANDER UK 8, you can compare the effects of market volatilities on FC Investment and SANTANDER 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 SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and SANTANDER.

Diversification Opportunities for FC Investment and SANTANDER

-0.63

Correlation Coefficient

FC Investment  SANTANDER

Excellent diversification

The 3 months correlation between FCIT and SANTANDER is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 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 SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of FC Investment i.e., FC Investment and SANTANDER go up and down completely randomly.

Pair Corralation between FC Investment and SANTANDER

Assuming the 90 days trading horizon FC Investment is expected to generate 8.73 times less return on investment than SANTANDER. In addition to that, FC Investment is 2.48 times more volatile than SANTANDER UK 8. It trades about 0.01 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.16 per unit of volatility. If you would invest  13,170  in SANTANDER UK 8 on December 25, 2024 and sell it today you would earn a total of  530.00  from holding SANTANDER UK 8 or generate 4.02% return on investment over 90 days.

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

FC Investment Trust  vs.  SANTANDER UK 8

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.

SANTANDER UK 8

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 8 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SANTANDER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FC Investment and SANTANDER

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

The idea behind FC Investment Trust and SANTANDER UK 8 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.