Correlation Between Luna Innovations and Focus Universal
Can any of the company-specific risk be diversified away by investing in both Luna Innovations and Focus Universal 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 Luna Innovations and Focus Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luna Innovations Incorporated and Focus Universal, you can compare the effects of market volatilities on Luna Innovations and Focus Universal 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 Luna Innovations with a short position of Focus Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luna Innovations and Focus Universal.
Diversification Opportunities for Luna Innovations and Focus Universal
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Luna and Focus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Luna Innovations Incorporated and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal and Luna Innovations 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 Luna Innovations Incorporated are associated (or correlated) with Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of Luna Innovations i.e., Luna Innovations and Focus Universal go up and down completely randomly.
Pair Corralation between Luna Innovations and Focus Universal
Given the investment horizon of 90 days Luna Innovations Incorporated is expected to under-perform the Focus Universal. But the stock apears to be less risky and, when comparing its historical volatility, Luna Innovations Incorporated is 1.1 times less risky than Focus Universal. The stock trades about -0.02 of its potential returns per unit of risk. The Focus Universal is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Focus Universal on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Focus Universal or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luna Innovations Incorporated vs. Focus Universal
Performance |
| Timeline |
| Luna Innovations |
| Focus Universal |
Luna Innovations and Focus Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luna Innovations and Focus Universal
The main advantage of trading using opposite Luna Innovations and Focus Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luna Innovations position performs unexpectedly, Focus Universal 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 Universal will offset losses from the drop in Focus Universal's long position.| Luna Innovations vs. ESCO Technologies | Luna Innovations vs. Know Labs | Luna Innovations vs. Focus Universal | Luna Innovations vs. Sono Tek Corp |
| Focus Universal vs. Sono Tek Corp | Focus Universal vs. Vishay Precision Group | Focus Universal vs. Keyence | Focus Universal vs. Luna Innovations Incorporated |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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