Correlation Between Impax Environmental and FC Investment

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

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

Diversification Opportunities for Impax Environmental and FC Investment

0.98

Correlation Coefficient

Impax Environmental  FC Investment

Almost no diversification

The 3 months correlation between Impax and FCIT is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets 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 Impax Environmental 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 Impax Environmental Markets 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 Impax Environmental i.e., Impax Environmental and FC Investment go up and down completely randomly.

Pair Corralation between Impax Environmental and FC Investment

Assuming the 90 days trading horizon Impax Environmental Markets is expected to generate 0.98 times more return on investment than FC Investment. However, Impax Environmental Markets is 1.02 times less risky than FC Investment. It trades about 0.28 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.23 per unit of risk. If you would invest  34,100  in Impax Environmental Markets on April 24, 2025 and sell it today you would earn a total of  4,900  from holding Impax Environmental Markets or generate 14.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Impax Environmental Markets  vs.  FC Investment Trust

Impax Environmental

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Impax Environmental Markets are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Impax Environmental exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 18 (%) 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.

Pair Trading with Impax Environmental and FC Investment

The main advantage of trading using opposite Impax Environmental and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental 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 Impax Environmental Markets 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.