Correlation Between FTI Consulting and Experian Plc

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Can any of the company-specific risk be diversified away by investing in both FTI Consulting and Experian Plc 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 FTI Consulting and Experian Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTI Consulting and Experian plc PK, you can compare the effects of market volatilities on FTI Consulting and Experian Plc 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 FTI Consulting with a short position of Experian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTI Consulting and Experian Plc.

Diversification Opportunities for FTI Consulting and Experian Plc

FTIExperianDiversified AwayFTIExperianDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between FTI and Experian is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FTI Consulting and Experian plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc PK and FTI Consulting 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 FTI Consulting are associated (or correlated) with Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc PK has no effect on the direction of FTI Consulting i.e., FTI Consulting and Experian Plc go up and down completely randomly.

Pair Corralation between FTI Consulting and Experian Plc

Considering the 90-day investment horizon FTI Consulting is expected to generate 1.05 times more return on investment than Experian Plc. However, FTI Consulting is 1.05 times more volatile than Experian plc PK. It trades about -0.06 of its potential returns per unit of risk. Experian plc PK is currently generating about -0.06 per unit of risk. If you would invest  19,579  in FTI Consulting on September 19, 2024 and sell it today you would lose (296.00) from holding FTI Consulting or give up 1.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

FTI Consulting  vs.  Experian plc PK

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-505
JavaScript chart by amCharts 3.21.15FCN EXPGY
       Timeline  
FTI Consulting 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FTI Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec195200205210215220225230
Experian plc PK 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Experian plc PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4647484950515253

FTI Consulting and Experian Plc Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.06-2.31-1.56-0.8-0.0510.641.322.02.683.36 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15FCN EXPGY
       Returns  

Pair Trading with FTI Consulting and Experian Plc

The main advantage of trading using opposite FTI Consulting and Experian Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTI Consulting position performs unexpectedly, Experian Plc 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 Experian Plc will offset losses from the drop in Experian Plc's long position.
The idea behind FTI Consulting and Experian plc PK 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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