Correlation Between FMC and Finch Therapeutics

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

By analyzing existing cross correlation between FMC Corporation and Finch Therapeutics Group, you can compare the effects of market volatilities on FMC and Finch Therapeutics 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 Finch Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Finch Therapeutics.

Diversification Opportunities for FMC and Finch Therapeutics

0.47

Correlation Coefficient

FMC  Finch Therapeutics

Very weak diversification

The 3 months correlation between FMC and Finch is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Finch Therapeutics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finch Therapeutics 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 Finch Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finch Therapeutics has no effect on the direction of FMC i.e., FMC and Finch Therapeutics go up and down completely randomly.

Pair Corralation between FMC and Finch Therapeutics

If you would invest  851.00  in Finch Therapeutics Group on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Finch Therapeutics Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.44%
Values	Daily Returns

FMC Corp.  vs.  Finch Therapeutics Group

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.

Finch Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finch Therapeutics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Finch Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FMC and Finch Therapeutics

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

The idea behind FMC Corporation and Finch Therapeutics Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.