Correlation Between Focus Impact and Mountain

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

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

Diversification Opportunities for Focus Impact and Mountain

0.23

Correlation Coefficient

Focus Impact  Mountain

Modest diversification

The 3 months correlation between Focus and Mountain is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Focus Impact Acquisition and Mountain Co I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Co I and Focus Impact 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 Impact Acquisition are associated (or correlated) with Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Co I has no effect on the direction of Focus Impact i.e., Focus Impact and Mountain go up and down completely randomly.

Pair Corralation between Focus Impact and Mountain

Assuming the 90 days horizon Focus Impact Acquisition is expected to under-perform the Mountain. In addition to that, Focus Impact is 1.23 times more volatile than Mountain Co I. It trades about -0.23 of its total potential returns per unit of risk. Mountain Co I is currently generating about 0.02 per unit of volatility. If you would invest  1.24  in Mountain Co I on September 16, 2024 and sell it today you would lose (0.20) from holding Mountain Co I or give up 16.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.22%
Values	Daily Returns

Focus Impact Acquisition  vs.  Mountain Co I

Focus Impact Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Impact Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mountain Co I

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mountain Co I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Mountain showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Impact and Mountain

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

The idea behind Focus Impact Acquisition and Mountain Co I 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.