Correlation Between Focus Home and Air Transport
Can any of the company-specific risk be diversified away by investing in both Focus Home and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on Focus Home and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Air Transport.
Diversification Opportunities for Focus Home and Air Transport
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and Air is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Focus Home i.e., Focus Home and Air Transport go up and down completely randomly.
Pair Corralation between Focus Home and Air Transport
Assuming the 90 days horizon Focus Home Interactive is expected to generate 8.24 times more return on investment than Air Transport. However, Focus Home is 8.24 times more volatile than Air Transport Services. It trades about 0.12 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.11 per unit of risk. If you would invest 2,125 in Focus Home Interactive on October 11, 2024 and sell it today you would earn a total of 170.00 from holding Focus Home Interactive or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Home Interactive vs. Air Transport Services
Performance |
| Timeline |
| Focus Home Interactive |
| Air Transport Services |
Focus Home and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and Air Transport
The main advantage of trading using opposite Focus Home and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Focus Home vs. AWILCO DRILLING PLC | Focus Home vs. BORR DRILLING NEW | Focus Home vs. Neinor Homes SA | Focus Home vs. American Homes 4 |
| Air Transport vs. NTT DATA | Air Transport vs. Teradata Corp | Air Transport vs. TERADATA | Air Transport vs. X FAB Silicon Foundries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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