Correlation Between Focus Home and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Focus Home and Mount Gibson 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 Mount Gibson 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 Mount Gibson Iron, you can compare the effects of market volatilities on Focus Home and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Mount Gibson.
Diversification Opportunities for Focus Home and Mount Gibson
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Focus and Mount is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Focus Home i.e., Focus Home and Mount Gibson go up and down completely randomly.
Pair Corralation between Focus Home and Mount Gibson
Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the Mount Gibson. But the stock apears to be less risky and, when comparing its historical volatility, Focus Home Interactive is 1.17 times less risky than Mount Gibson. The stock trades about -0.02 of its potential returns per unit of risk. The Mount Gibson Iron is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Mount Gibson Iron on October 13, 2024 and sell it today you would lose (25.00) from holding Mount Gibson Iron or give up 59.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Focus Home Interactive vs. Mount Gibson Iron
Performance |
| Timeline |
| Focus Home Interactive |
| Mount Gibson Iron |
Focus Home and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and Mount Gibson
The main advantage of trading using opposite Focus Home and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| Focus Home vs. TYSON FOODS A | Focus Home vs. MagnaChip Semiconductor Corp | Focus Home vs. BE Semiconductor Industries | Focus Home vs. Tyson Foods |
| Mount Gibson vs. Neinor Homes SA | Mount Gibson vs. MHP Hotel AG | Mount Gibson vs. Focus Home Interactive | Mount Gibson vs. 24SEVENOFFICE GROUP AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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