Correlation Between Focus Home and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Focus Home and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on Focus Home and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and IMPERIAL TOBACCO.
Diversification Opportunities for Focus Home and IMPERIAL TOBACCO
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and IMPERIAL is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Focus Home i.e., Focus Home and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Focus Home and IMPERIAL TOBACCO
Assuming the 90 days horizon Focus Home Interactive is expected to generate 6.35 times more return on investment than IMPERIAL TOBACCO. However, Focus Home is 6.35 times more volatile than IMPERIAL TOBACCO . It trades about 0.11 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about -0.06 per unit of risk. If you would invest 1,880 in Focus Home Interactive on October 22, 2024 and sell it today you would earn a total of 125.00 from holding Focus Home Interactive or generate 6.65% 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. IMPERIAL TOBACCO
Performance |
| Timeline |
| Focus Home Interactive |
| IMPERIAL TOBACCO |
Focus Home and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and IMPERIAL TOBACCO
The main advantage of trading using opposite Focus Home and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Focus Home vs. Xenia Hotels Resorts | Focus Home vs. Host Hotels Resorts | Focus Home vs. InterContinental Hotels Group | Focus Home vs. Monster Beverage Corp |
| IMPERIAL TOBACCO vs. Corporate Travel Management | IMPERIAL TOBACCO vs. Sims Metal Management | IMPERIAL TOBACCO vs. SUN LIFE FINANCIAL | IMPERIAL TOBACCO vs. United Insurance Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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