Correlation Between Intermediate Capital and FC Investment

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

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

Diversification Opportunities for Intermediate Capital and FC Investment

-0.34

Correlation Coefficient

Intermediate Capital  FC Investment

Very good diversification

The 3 months correlation between Intermediate and FCIT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and FC Investment go up and down completely randomly.

Pair Corralation between Intermediate Capital and FC Investment

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 3.58 times less return on investment than FC Investment. In addition to that, Intermediate Capital is 2.72 times more volatile than FC Investment Trust. It trades about 0.03 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.26 per unit of volatility. If you would invest  100,448  in FC Investment Trust on September 4, 2024 and sell it today you would earn a total of  12,752  from holding FC Investment Trust or generate 12.7% return on investment over 90 days.

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

Intermediate Capital Group  vs.  FC Investment Trust

Intermediate Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

FC Investment Trust

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FC Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intermediate Capital and FC Investment

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

The idea behind Intermediate Capital Group and FC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.