Correlation Between ESCO Technologies and Focus Universal
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Focus Universal 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 ESCO Technologies and Focus Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Focus Universal, you can compare the effects of market volatilities on ESCO Technologies and Focus Universal 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 ESCO Technologies with a short position of Focus Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Focus Universal.
Diversification Opportunities for ESCO Technologies and Focus Universal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESCO and Focus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal and ESCO Technologies 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 ESCO Technologies are associated (or correlated) with Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Focus Universal go up and down completely randomly.
Pair Corralation between ESCO Technologies and Focus Universal
Considering the 90-day investment horizon ESCO Technologies is expected to generate 435.56 times less return on investment than Focus Universal. But when comparing it to its historical volatility, ESCO Technologies is 36.91 times less risky than Focus Universal. It trades about 0.02 of its potential returns per unit of risk. Focus Universal is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Focus Universal on October 22, 2024 and sell it today you would earn a total of 30.00 from holding Focus Universal or generate 115.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESCO Technologies vs. Focus Universal
Performance |
| Timeline |
| ESCO Technologies |
| Focus Universal |
ESCO Technologies and Focus Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Focus Universal
The main advantage of trading using opposite ESCO Technologies and Focus Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Focus Universal 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 Focus Universal will offset losses from the drop in Focus Universal's long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
| Focus Universal vs. ESCO Technologies | Focus Universal vs. Genasys | Focus Universal vs. Know Labs | Focus Universal vs. Sono Tek Corp |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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