Correlation Between Focus Universal and Schmitt Industries
Can any of the company-specific risk be diversified away by investing in both Focus Universal and Schmitt Industries 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 Universal and Schmitt Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Universal and Schmitt Industries, you can compare the effects of market volatilities on Focus Universal and Schmitt Industries 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 Universal with a short position of Schmitt Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Universal and Schmitt Industries.
Diversification Opportunities for Focus Universal and Schmitt Industries
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Focus and Schmitt is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Schmitt Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schmitt Industries and Focus Universal 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 Universal are associated (or correlated) with Schmitt Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schmitt Industries has no effect on the direction of Focus Universal i.e., Focus Universal and Schmitt Industries go up and down completely randomly.
Pair Corralation between Focus Universal and Schmitt Industries
Given the investment horizon of 90 days Focus Universal is expected to under-perform the Schmitt Industries. But the stock apears to be less risky and, when comparing its historical volatility, Focus Universal is 12.84 times less risky than Schmitt Industries. The stock trades about -0.07 of its potential returns per unit of risk. The Schmitt Industries is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Schmitt Industries on August 24, 2024 and sell it today you would lose (72.00) from holding Schmitt Industries or give up 79.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 9.07% |
| Values | Daily Returns |
Focus Universal vs. Schmitt Industries
Performance |
| Timeline |
| Focus Universal |
| Schmitt Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Focus Universal and Schmitt Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Universal and Schmitt Industries
The main advantage of trading using opposite Focus Universal and Schmitt Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Universal position performs unexpectedly, Schmitt Industries 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 Schmitt Industries will offset losses from the drop in Schmitt Industries' long position.| Focus Universal vs. Sono Tek Corp | Focus Universal vs. Vishay Precision Group | Focus Universal vs. Keyence | Focus Universal vs. Luna Innovations Incorporated |
| Schmitt Industries vs. Nanalysis Scientific Corp | Schmitt Industries vs. Genasys | Schmitt Industries vs. Kraken Robotics | Schmitt Industries vs. Mesa Laboratories |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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