Correlation Between Nasdaq and Focus Home
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Focus Home Interactive, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Focus Home.
Diversification Opportunities for Nasdaq and Focus Home
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq and Focus is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Focus Home go up and down completely randomly.
Pair Corralation between Nasdaq and Focus Home
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.39 times more return on investment than Focus Home. However, Nasdaq Inc is 2.55 times less risky than Focus Home. It trades about 0.28 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.19 per unit of risk. If you would invest 7,743 in Nasdaq Inc on November 3, 2024 and sell it today you would earn a total of 491.00 from holding Nasdaq Inc or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Nasdaq Inc vs. Focus Home Interactive
Performance |
| Timeline |
| Nasdaq Inc |
| Focus Home Interactive |
Nasdaq and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Focus Home
The main advantage of trading using opposite Nasdaq and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.The idea behind Nasdaq Inc and Focus Home Interactive 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.| Focus Home vs. Broadridge Financial Solutions | Focus Home vs. COPLAND ROAD CAPITAL | Focus Home vs. Hisense Home Appliances | Focus Home vs. INVITATION HOMES DL |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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