Correlation Between Vontier Corp and Focus Universal

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

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

Diversification Opportunities for Vontier Corp and Focus Universal

-0.11

Correlation Coefficient

Vontier Corp  Focus Universal

Good diversification

The 3 months correlation between Vontier and Focus is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal and Vontier Corp 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 Vontier Corp are associated (or correlated) with Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of Vontier Corp i.e., Vontier Corp and Focus Universal go up and down completely randomly.

Pair Corralation between Vontier Corp and Focus Universal

Considering the 90-day investment horizon Vontier Corp is expected to generate 1.04 times less return on investment than Focus Universal. But when comparing it to its historical volatility, Vontier Corp is 3.05 times less risky than Focus Universal. It trades about 0.11 of its potential returns per unit of risk. Focus Universal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Focus Universal on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Focus Universal or generate 4.0% return on investment over 90 days.

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

Vontier Corp  vs.  Focus Universal

Vontier Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vontier Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vontier Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Focus Universal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Universal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Focus Universal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vontier Corp and Focus Universal

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

The idea behind Vontier Corp and Focus Universal 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.