Correlation Between RCS MediaGroup and Focus Home
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Focus Home 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 RCS MediaGroup and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Focus Home Interactive, you can compare the effects of market volatilities on RCS MediaGroup and Focus Home 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 RCS MediaGroup with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Focus Home.
Diversification Opportunities for RCS MediaGroup and Focus Home
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RCS and Focus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Focus Home go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Focus Home
Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.4 times more return on investment than Focus Home. However, RCS MediaGroup SpA is 2.48 times less risky than Focus Home. It trades about 0.05 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.02 per unit of risk. If you would invest 61.00 in RCS MediaGroup SpA on November 7, 2024 and sell it today you would earn a total of 26.00 from holding RCS MediaGroup SpA or generate 42.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
RCS MediaGroup SpA vs. Focus Home Interactive
Performance |
Timeline |
RCS MediaGroup SpA |
Focus Home Interactive |
RCS MediaGroup and Focus Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCS MediaGroup and Focus Home
The main advantage of trading using opposite RCS MediaGroup and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, Focus Home 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 Home will offset losses from the drop in Focus Home's long position.RCS MediaGroup vs. WisdomTree Investments | RCS MediaGroup vs. HK Electric Investments | RCS MediaGroup vs. PRECISION DRILLING P | RCS MediaGroup vs. Odyssean Investment Trust |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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