Correlation Between NATIONAL INVESTMENT and FINCORP INVESTMENT

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

By analyzing existing cross correlation between NATIONAL INVESTMENT TRUST and FINCORP INVESTMENT LTD, you can compare the effects of market volatilities on NATIONAL INVESTMENT and FINCORP 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 NATIONAL INVESTMENT with a short position of FINCORP INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and FINCORP INVESTMENT.

Diversification Opportunities for NATIONAL INVESTMENT and FINCORP INVESTMENT

0.68

Correlation Coefficient

NATIONAL INVESTMENT  FINCORP INVESTMENT

Poor diversification

The 3 months correlation between NATIONAL and FINCORP is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and FINCORP INVESTMENT LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FINCORP INVESTMENT LTD and NATIONAL 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 NATIONAL INVESTMENT TRUST are associated (or correlated) with FINCORP INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FINCORP INVESTMENT LTD has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and FINCORP INVESTMENT go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and FINCORP INVESTMENT

Assuming the 90 days trading horizon NATIONAL INVESTMENT TRUST is expected to generate 1.43 times more return on investment than FINCORP INVESTMENT. However, NATIONAL INVESTMENT is 1.43 times more volatile than FINCORP INVESTMENT LTD. It trades about 0.08 of its potential returns per unit of risk. FINCORP INVESTMENT LTD is currently generating about 0.1 per unit of risk. If you would invest  1,010  in NATIONAL INVESTMENT TRUST on September 13, 2024 and sell it today you would earn a total of  160.00  from holding NATIONAL INVESTMENT TRUST or generate 15.84% return on investment over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  FINCORP INVESTMENT LTD

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, NATIONAL INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

FINCORP INVESTMENT LTD

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FINCORP INVESTMENT LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, FINCORP INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NATIONAL INVESTMENT and FINCORP INVESTMENT

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

The idea behind NATIONAL INVESTMENT TRUST and FINCORP INVESTMENT LTD 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.