Correlation Between Falcon Focus and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Falcon Focus and Growth Opportunities 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 Falcon Focus and Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Focus Scv and Growth Opportunities Fund, you can compare the effects of market volatilities on Falcon Focus and Growth Opportunities 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 Falcon Focus with a short position of Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Focus and Growth Opportunities.
Diversification Opportunities for Falcon Focus and Growth Opportunities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Falcon and Growth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Focus Scv and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities and Falcon Focus 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 Falcon Focus Scv are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Falcon Focus i.e., Falcon Focus and Growth Opportunities go up and down completely randomly.
Pair Corralation between Falcon Focus and Growth Opportunities
Assuming the 90 days horizon Falcon Focus is expected to generate 1.69 times less return on investment than Growth Opportunities. But when comparing it to its historical volatility, Falcon Focus Scv is 1.3 times less risky than Growth Opportunities. It trades about 0.09 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,358 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 2,498 from holding Growth Opportunities Fund or generate 74.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Focus Scv vs. Growth Opportunities Fund
Performance |
| Timeline |
| Falcon Focus Scv |
| Growth Opportunities |
Falcon Focus and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Focus and Growth Opportunities
The main advantage of trading using opposite Falcon Focus and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Focus position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Falcon Focus vs. Blackrock Inflation Protected | Falcon Focus vs. T Rowe Price | Falcon Focus vs. Oklahoma College Savings | Falcon Focus vs. Inflation Protected Bond Fund |
| Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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