Correlation Between EJF Investments and FC Investment

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

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

Diversification Opportunities for EJF Investments and FC Investment

0.89

Correlation Coefficient

EJF Investments  FC Investment

Very poor diversification

The 3 months correlation between EJF and FCIT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments 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 EJF Investments 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 EJF Investments 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 EJF Investments i.e., EJF Investments and FC Investment go up and down completely randomly.

Pair Corralation between EJF Investments and FC Investment

Assuming the 90 days trading horizon EJF Investments is expected to generate 2.27 times less return on investment than FC Investment. But when comparing it to its historical volatility, EJF Investments is 2.12 times less risky than FC Investment. It trades about 0.25 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  99,861  in FC Investment Trust on April 20, 2025 and sell it today you would earn a total of  14,839  from holding FC Investment Trust or generate 14.86% return on investment over 90 days.

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

EJF Investments  vs.  FC Investment Trust

EJF Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EJF Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FC Investment Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FC Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EJF Investments and FC Investment

The main advantage of trading using opposite EJF Investments and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments 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 EJF Investments 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.