Correlation Between Focus Home and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Focus Home and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on Focus Home and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Retail Estates.
Diversification Opportunities for Focus Home and Retail Estates
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Focus and Retail is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Focus Home i.e., Focus Home and Retail Estates go up and down completely randomly.
Pair Corralation between Focus Home and Retail Estates
Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the Retail Estates. In addition to that, Focus Home is 2.56 times more volatile than Retail Estates NV. It trades about -0.28 of its total potential returns per unit of risk. Retail Estates NV is currently generating about -0.13 per unit of volatility. If you would invest 5,880 in Retail Estates NV on November 7, 2024 and sell it today you would lose (180.00) from holding Retail Estates NV or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Home Interactive vs. Retail Estates NV
Performance |
| Timeline |
| Focus Home Interactive |
| Retail Estates NV |
Focus Home and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and Retail Estates
The main advantage of trading using opposite Focus Home and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Focus Home vs. Nintendo Co | Focus Home vs. Nintendo Co | Focus Home vs. Sea Limited | Focus Home vs. Electronic Arts |
| Retail Estates vs. Elmos Semiconductor SE | Retail Estates vs. CHINA TELECOM H | Retail Estates vs. Cairo Communication SpA | Retail Estates vs. Nordic Semiconductor ASA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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