Correlation Between Focus Impact and FTAC Emerald

Can any of the company-specific risk be diversified away by investing in both Focus Impact and FTAC Emerald 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 FTAC Emerald 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 FTAC Emerald Acquisition, you can compare the effects of market volatilities on Focus Impact and FTAC Emerald 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 FTAC Emerald. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Impact and FTAC Emerald.

Diversification Opportunities for Focus Impact and FTAC Emerald

-0.9

Correlation Coefficient

Focus Impact  FTAC Emerald

Pay attention - limited upside

The 3 months correlation between Focus and FTAC is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Focus Impact Acquisition and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition 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 FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of Focus Impact i.e., Focus Impact and FTAC Emerald go up and down completely randomly.

Pair Corralation between Focus Impact and FTAC Emerald

Given the investment horizon of 90 days Focus Impact Acquisition is expected to under-perform the FTAC Emerald. But the pink sheet apears to be less risky and, when comparing its historical volatility, Focus Impact Acquisition is 1.15 times less risky than FTAC Emerald. The pink sheet trades about -0.07 of its potential returns per unit of risk. The FTAC Emerald Acquisition is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  20.00  in FTAC Emerald Acquisition on August 31, 2024 and sell it today you would earn a total of  47.00  from holding FTAC Emerald Acquisition or generate 235.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	75.0%
Values	Daily Returns

Focus Impact Acquisition  vs.  FTAC Emerald Acquisition

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FTAC Emerald Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FTAC Emerald Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, FTAC Emerald showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Impact and FTAC Emerald

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

The idea behind Focus Impact Acquisition and FTAC Emerald Acquisition 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.