Correlation Between Focus Impact and Slam Corp
Can any of the company-specific risk be diversified away by investing in both Focus Impact and Slam Corp 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 Impact and Slam Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Impact Acquisition and Slam Corp, you can compare the effects of market volatilities on Focus Impact and Slam Corp 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 Impact with a short position of Slam Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Impact and Slam Corp.
Diversification Opportunities for Focus Impact and Slam Corp
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Focus and Slam is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Focus Impact Acquisition and Slam Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slam Corp and Focus Impact 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 Impact Acquisition are associated (or correlated) with Slam Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slam Corp has no effect on the direction of Focus Impact i.e., Focus Impact and Slam Corp go up and down completely randomly.
Pair Corralation between Focus Impact and Slam Corp
Assuming the 90 days horizon Focus Impact Acquisition is expected to generate 1.98 times more return on investment than Slam Corp. However, Focus Impact is 1.98 times more volatile than Slam Corp. It trades about 0.12 of its potential returns per unit of risk. Slam Corp is currently generating about 0.07 per unit of risk. If you would invest 5.00 in Focus Impact Acquisition on August 30, 2024 and sell it today you would lose (4.00) from holding Focus Impact Acquisition or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.92% |
| Values | Daily Returns |
Focus Impact Acquisition vs. Slam Corp
Performance |
| Timeline |
| Focus Impact Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Slam Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Focus Impact and Slam Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Impact and Slam Corp
The main advantage of trading using opposite Focus Impact and Slam Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Impact position performs unexpectedly, Slam Corp 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 Slam Corp will offset losses from the drop in Slam Corp's long position.The idea behind Focus Impact Acquisition and Slam Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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