Correlation Between Focus Universal and Teledyne Technologies

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

By analyzing existing cross correlation between Focus Universal and Teledyne Technologies Incorporated, you can compare the effects of market volatilities on Focus Universal and Teledyne Technologies 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 Teledyne Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Universal and Teledyne Technologies.

Diversification Opportunities for Focus Universal and Teledyne Technologies

-0.5

Correlation Coefficient

Focus Universal  Teledyne Technologies

Very good diversification

The 3 months correlation between Focus and Teledyne is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies 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 Teledyne Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teledyne Technologies has no effect on the direction of Focus Universal i.e., Focus Universal and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Focus Universal and Teledyne Technologies

Given the investment horizon of 90 days Focus Universal is expected to generate 2.62 times less return on investment than Teledyne Technologies. In addition to that, Focus Universal is 5.86 times more volatile than Teledyne Technologies Incorporated. It trades about 0.01 of its total potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.18 per unit of volatility. If you would invest  42,000  in Teledyne Technologies Incorporated on September 2, 2024 and sell it today you would earn a total of  6,526  from holding Teledyne Technologies Incorporated or generate 15.54% 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.  Teledyne Technologies Incorpor

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Teledyne Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Teledyne Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Universal and Teledyne Technologies

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

The idea behind Focus Universal and Teledyne Technologies Incorporated 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.