Correlation Between Focus Financial and CBH
Can any of the company-specific risk be diversified away by investing in both Focus Financial and CBH 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 Financial and CBH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Financial Partners and CBH, you can compare the effects of market volatilities on Focus Financial and CBH 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 Financial with a short position of CBH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Financial and CBH.
Diversification Opportunities for Focus Financial and CBH
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Focus and CBH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Focus Financial Partners and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Focus Financial 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 Financial Partners are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Focus Financial i.e., Focus Financial and CBH go up and down completely randomly.
Pair Corralation between Focus Financial and CBH
Given the investment horizon of 90 days Focus Financial Partners is expected to generate 1.6 times more return on investment than CBH. However, Focus Financial is 1.6 times more volatile than CBH. It trades about 0.16 of its potential returns per unit of risk. CBH is currently generating about 0.05 per unit of risk. If you would invest 4,395 in Focus Financial Partners on September 19, 2024 and sell it today you would earn a total of 821.00 from holding Focus Financial Partners or generate 18.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.42% |
| Values | Daily Returns |
Focus Financial Partners vs. CBH
Performance |
| Timeline |
| Focus Financial Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Focus Financial and CBH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Financial and CBH
The main advantage of trading using opposite Focus Financial and CBH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Financial position performs unexpectedly, CBH 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 CBH will offset losses from the drop in CBH's long position.| Focus Financial vs. Federated Premier Municipal | Focus Financial vs. Blackrock Muniyield | Focus Financial vs. Diamond Hill Investment | Focus Financial vs. NXG NextGen Infrastructure |
| CBH vs. Brookfield Real Assets | CBH vs. Guggenheim Strategic Opportunities | CBH vs. Cornerstone Strategic Return | CBH vs. Cornerstone Strategic Value |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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