Correlation Between IMPERIAL TOBACCO and Focus Home
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Focus Home Interactive, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Focus Home.
Diversification Opportunities for IMPERIAL TOBACCO and Focus Home
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IMPERIAL and Focus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Focus Home go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Focus Home
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to under-perform the Focus Home. But the stock apears to be less risky and, when comparing its historical volatility, IMPERIAL TOBACCO is 2.04 times less risky than Focus Home. The stock trades about -0.03 of its potential returns per unit of risk. The Focus Home Interactive is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,788 in Focus Home Interactive on December 30, 2024 and sell it today you would earn a total of 118.00 from holding Focus Home Interactive or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Focus Home Interactive
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Focus Home Interactive |
IMPERIAL TOBACCO and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Focus Home
The main advantage of trading using opposite IMPERIAL TOBACCO and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. VITEC SOFTWARE GROUP | IMPERIAL TOBACCO vs. United Microelectronics Corp | IMPERIAL TOBACCO vs. STORE ELECTRONIC | IMPERIAL TOBACCO vs. ASURE SOFTWARE |
| Focus Home vs. GALENA MINING LTD | Focus Home vs. MINCO SILVER | Focus Home vs. Cembra Money Bank | Focus Home vs. Air Lease |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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