Correlation Between Focus Universal and Itron

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

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

Diversification Opportunities for Focus Universal and Itron

0.08

Correlation Coefficient

Focus Universal  Itron

Significant diversification

The 3 months correlation between Focus and Itron is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc 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 Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Focus Universal i.e., Focus Universal and Itron go up and down completely randomly.

Pair Corralation between Focus Universal and Itron

Given the investment horizon of 90 days Focus Universal is expected to generate 11.81 times more return on investment than Itron. However, Focus Universal is 11.81 times more volatile than Itron Inc. It trades about 0.07 of its potential returns per unit of risk. Itron Inc is currently generating about 0.0 per unit of risk. If you would invest  485.00  in Focus Universal on December 28, 2024 and sell it today you would lose (13.00) from holding Focus Universal or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Focus Universal  vs.  Itron Inc

Focus Universal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Focus Universal showed solid returns over the last few months and may actually be approaching a breakup point.

Itron Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Itron Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Itron is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Focus Universal and Itron

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

The idea behind Focus Universal and Itron Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.