Correlation Between FC Investment and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both FC Investment and Aberforth Smaller 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 FC Investment and Aberforth Smaller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Aberforth Smaller Companies, you can compare the effects of market volatilities on FC Investment and Aberforth Smaller 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 FC Investment with a short position of Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Aberforth Smaller.
Diversification Opportunities for FC Investment and Aberforth Smaller
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FCIT and Aberforth is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller and FC Investment 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 FC Investment Trust are associated (or correlated) with Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of FC Investment i.e., FC Investment and Aberforth Smaller go up and down completely randomly.
Pair Corralation between FC Investment and Aberforth Smaller
Assuming the 90 days trading horizon FC Investment is expected to generate 1.23 times less return on investment than Aberforth Smaller. But when comparing it to its historical volatility, FC Investment Trust is 1.01 times less risky than Aberforth Smaller. It trades about 0.27 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 132,200 in Aberforth Smaller Companies on April 21, 2025 and sell it today you would earn a total of 24,600 from holding Aberforth Smaller Companies or generate 18.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
FC Investment Trust vs. Aberforth Smaller Companies
Performance |
Timeline |
FC Investment Trust |
Aberforth Smaller |
FC Investment and Aberforth Smaller Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FC Investment and Aberforth Smaller
The main advantage of trading using opposite FC Investment and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.FC Investment vs. LBG Media PLC | FC Investment vs. Liberty Media Corp | FC Investment vs. BE Semiconductor Industries | FC Investment vs. Everyman Media Group |
Aberforth Smaller vs. The Mercantile Investment | Aberforth Smaller vs. Schroders Investment Trusts | Aberforth Smaller vs. Jacquet Metal Service | Aberforth Smaller vs. Ross Stores |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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