Correlation Between Focus Home and Broadcom
Can any of the company-specific risk be diversified away by investing in both Focus Home and Broadcom 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 Focus Home and Broadcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and Broadcom, you can compare the effects of market volatilities on Focus Home and Broadcom 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 Focus Home with a short position of Broadcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Broadcom.
Diversification Opportunities for Focus Home and Broadcom
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Focus and Broadcom is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and Focus Home 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 Focus Home Interactive are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Focus Home i.e., Focus Home and Broadcom go up and down completely randomly.
Pair Corralation between Focus Home and Broadcom
Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the Broadcom. In addition to that, Focus Home is 1.59 times more volatile than Broadcom. It trades about -0.02 of its total potential returns per unit of risk. Broadcom is currently generating about 0.11 per unit of volatility. If you would invest 5,343 in Broadcom on November 1, 2024 and sell it today you would earn a total of 14,303 from holding Broadcom or generate 267.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Home Interactive vs. Broadcom
Performance |
| Timeline |
| Focus Home Interactive |
| Broadcom |
Focus Home and Broadcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and Broadcom
The main advantage of trading using opposite Focus Home and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Broadcom 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 Broadcom will offset losses from the drop in Broadcom's long position.| Focus Home vs. Singapore Reinsurance | Focus Home vs. HANOVER INSURANCE | Focus Home vs. Insurance Australia Group | Focus Home vs. INSURANCE AUST GRP |
| Broadcom vs. Focus Home Interactive | Broadcom vs. Xenia Hotels Resorts | Broadcom vs. InterContinental Hotels Group | Broadcom vs. MELIA HOTELS |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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