Correlation Between Focus Home and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Focus Home and WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE, you can compare the effects of market volatilities on Focus Home and WT OFFSHORE 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and WT OFFSHORE.
Diversification Opportunities for Focus Home and WT OFFSHORE
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Focus and UWV is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of Focus Home i.e., Focus Home and WT OFFSHORE go up and down completely randomly.
Pair Corralation between Focus Home and WT OFFSHORE
Assuming the 90 days horizon Focus Home is expected to generate 1.53 times less return on investment than WT OFFSHORE. But when comparing it to its historical volatility, Focus Home Interactive is 1.2 times less risky than WT OFFSHORE. It trades about 0.17 of its potential returns per unit of risk. WT OFFSHORE is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 149.00 in WT OFFSHORE on October 19, 2024 and sell it today you would earn a total of 30.00 from holding WT OFFSHORE or generate 20.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Focus Home Interactive vs. WT OFFSHORE
Performance |
| Timeline |
| Focus Home Interactive |
| WT OFFSHORE |
Focus Home and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and WT OFFSHORE
The main advantage of trading using opposite Focus Home and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, WT OFFSHORE 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| Focus Home vs. Corporate Office Properties | Focus Home vs. Wayside Technology Group | Focus Home vs. BW OFFSHORE LTD | Focus Home vs. NorAm Drilling AS |
| WT OFFSHORE vs. Autohome ADR | WT OFFSHORE vs. Focus Home Interactive | WT OFFSHORE vs. ADDUS HOMECARE | WT OFFSHORE vs. Salesforce |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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