Correlation Between Forsys Metals and Economic Investment

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

By analyzing existing cross correlation between Forsys Metals Corp and Economic Investment Trust, you can compare the effects of market volatilities on Forsys Metals and Economic Investment 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 Forsys Metals with a short position of Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and Economic Investment.

Diversification Opportunities for Forsys Metals and Economic Investment

-0.78

Correlation Coefficient

Forsys Metals  Economic Investment

Pay attention - limited upside

The 3 months correlation between Forsys and Economic is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust and Forsys Metals 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 Forsys Metals Corp are associated (or correlated) with Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of Forsys Metals i.e., Forsys Metals and Economic Investment go up and down completely randomly.

Pair Corralation between Forsys Metals and Economic Investment

Assuming the 90 days trading horizon Forsys Metals Corp is expected to under-perform the Economic Investment. In addition to that, Forsys Metals is 2.57 times more volatile than Economic Investment Trust. It trades about -0.09 of its total potential returns per unit of risk. Economic Investment Trust is currently generating about 0.05 per unit of volatility. If you would invest  18,070  in Economic Investment Trust on December 5, 2024 and sell it today you would earn a total of  268.00  from holding Economic Investment Trust or generate 1.48% return on investment over 90 days.

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

Forsys Metals Corp  vs.  Economic Investment Trust

Forsys Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forsys Metals Corp 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Economic Investment Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Economic Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Economic Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Forsys Metals and Economic Investment

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

The idea behind Forsys Metals Corp and Economic Investment Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.