Correlation Between FC Investment and Third Point

Can any of the company-specific risk be diversified away by investing in both FC Investment and Third Point 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 Third Point 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 Third Point Investors, you can compare the effects of market volatilities on FC Investment and Third Point 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 Third Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Third Point.

Diversification Opportunities for FC Investment and Third Point

0.57

Correlation Coefficient

FC Investment  Third Point

Very weak diversification

The 3 months correlation between FCIT and Third is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Third Point Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Point Investors 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 Third Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Point Investors has no effect on the direction of FC Investment i.e., FC Investment and Third Point go up and down completely randomly.

Pair Corralation between FC Investment and Third Point

Assuming the 90 days trading horizon FC Investment Trust is expected to generate 1.8 times more return on investment than Third Point. However, FC Investment is 1.8 times more volatile than Third Point Investors. It trades about 0.2 of its potential returns per unit of risk. Third Point Investors is currently generating about 0.02 per unit of risk. If you would invest  109,428  in FC Investment Trust on April 10, 2025 and sell it today you would earn a total of  2,372  from holding FC Investment Trust or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

FC Investment Trust  vs.  Third Point Investors

FC Investment Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 15 (%) 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 August 2025.

Third Point Investors

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Third Point Investors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Third Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FC Investment and Third Point

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

The idea behind FC Investment Trust and Third Point Investors 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.