Correlation Between Starfleet Innotech and Focus Financial

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

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

Diversification Opportunities for Starfleet Innotech and Focus Financial

0.56

Correlation Coefficient

Starfleet Innotech  Focus Financial

Very weak diversification

The 3 months correlation between Starfleet and Focus is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Starfleet Innotech and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners and Starfleet Innotech 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 Starfleet Innotech are associated (or correlated) with Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Starfleet Innotech i.e., Starfleet Innotech and Focus Financial go up and down completely randomly.

Pair Corralation between Starfleet Innotech and Focus Financial

If you would invest  0.31  in Starfleet Innotech on September 27, 2024 and sell it today you would lose (0.05) from holding Starfleet Innotech or give up 16.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Starfleet Innotech  vs.  Focus Financial Partners

Starfleet Innotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Starfleet Innotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Starfleet Innotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Focus Financial Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Focus Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Starfleet Innotech and Focus Financial

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

The idea behind Starfleet Innotech and Focus Financial Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.