Correlation Between Sprott Focus and Sekisui House

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

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

Diversification Opportunities for Sprott Focus and Sekisui House

-0.69

Correlation Coefficient

Sprott Focus  Sekisui House

Excellent diversification

The 3 months correlation between Sprott and Sekisui is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House and Sprott Focus 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 Sprott Focus Trust are associated (or correlated) with Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Sprott Focus i.e., Sprott Focus and Sekisui House go up and down completely randomly.

Pair Corralation between Sprott Focus and Sekisui House

Given the investment horizon of 90 days Sprott Focus is expected to generate 3.6 times less return on investment than Sekisui House. But when comparing it to its historical volatility, Sprott Focus Trust is 2.72 times less risky than Sekisui House. It trades about 0.03 of its potential returns per unit of risk. Sekisui House is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,927  in Sekisui House on September 12, 2024 and sell it today you would earn a total of  401.00  from holding Sekisui House or generate 20.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.44%
Values	Daily Returns

Sprott Focus Trust  vs.  Sekisui House

Sprott Focus Trust

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Sprott Focus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sprott Focus and Sekisui House

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

The idea behind Sprott Focus Trust and Sekisui House 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.