Correlation Between FMC and Joint Stock

Can any of the company-specific risk be diversified away by investing in both FMC and Joint Stock 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 FMC and Joint Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FMC Corporation and Joint Stock Commercial, you can compare the effects of market volatilities on FMC and Joint Stock 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 FMC with a short position of Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Joint Stock.

Diversification Opportunities for FMC and Joint Stock

0.92

Correlation Coefficient

FMC  Joint Stock

Almost no diversification

The 3 months correlation between FMC and Joint is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Joint Stock Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock Commercial and FMC 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 FMC Corporation are associated (or correlated) with Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock Commercial has no effect on the direction of FMC i.e., FMC and Joint Stock go up and down completely randomly.

Pair Corralation between FMC and Joint Stock

Considering the 90-day investment horizon FMC Corporation is expected to generate 1.5 times more return on investment than Joint Stock. However, FMC is 1.5 times more volatile than Joint Stock Commercial. It trades about -0.01 of its potential returns per unit of risk. Joint Stock Commercial is currently generating about -0.04 per unit of risk. If you would invest  5,715  in FMC Corporation on October 6, 2024 and sell it today you would lose (841.00) from holding FMC Corporation or give up 14.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.19%
Values	Daily Returns

FMC Corp.  vs.  Joint Stock Commercial

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Joint Stock Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with FMC and Joint Stock

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

The idea behind FMC Corporation and Joint Stock Commercial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.