Correlation Between Focus Universal and Fortive Corp

Can any of the company-specific risk be diversified away by investing in both Focus Universal and Fortive Corp 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 Universal and Fortive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focus Universal and Fortive Corp, you can compare the effects of market volatilities on Focus Universal and Fortive Corp 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 Universal with a short position of Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Universal and Fortive Corp.

Diversification Opportunities for Focus Universal and Fortive Corp

-0.4

Correlation Coefficient

Focus Universal  Fortive Corp

Very good diversification

The 3 months correlation between Focus and Fortive is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and Focus Universal 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 Universal are associated (or correlated) with Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Focus Universal i.e., Focus Universal and Fortive Corp go up and down completely randomly.

Pair Corralation between Focus Universal and Fortive Corp

Given the investment horizon of 90 days Focus Universal is expected to generate 5.85 times less return on investment than Fortive Corp. In addition to that, Focus Universal is 3.03 times more volatile than Fortive Corp. It trades about 0.02 of its total potential returns per unit of risk. Fortive Corp is currently generating about 0.34 per unit of volatility. If you would invest  7,209  in Fortive Corp on August 31, 2024 and sell it today you would earn a total of  724.00  from holding Fortive Corp or generate 10.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Focus Universal  vs.  Fortive Corp

Focus Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Focus Universal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fortive Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fortive Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Focus Universal and Fortive Corp

The main advantage of trading using opposite Focus Universal and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Universal position performs unexpectedly, Fortive Corp 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 Fortive Corp will offset losses from the drop in Fortive Corp's long position.

The idea behind Focus Universal and Fortive Corp 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.