Correlation Between Focus Financial and Boeing

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Can any of the company-specific risk be diversified away by investing in both Focus Financial and Boeing 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 Financial and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Financial Partners and Boeing Company, you can compare the effects of market volatilities on Focus Financial and Boeing 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 Financial with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Financial and Boeing.

Diversification Opportunities for Focus Financial and Boeing

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Focus and Boeing is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Focus Financial Partners and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company and Focus Financial 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 Financial Partners are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing Company has no effect on the direction of Focus Financial i.e., Focus Financial and Boeing go up and down completely randomly.

Pair Corralation between Focus Financial and Boeing

Given the investment horizon of 90 days Focus Financial Partners is expected to generate 0.94 times more return on investment than Boeing. However, Focus Financial Partners is 1.06 times less risky than Boeing. It trades about 0.0 of its potential returns per unit of risk. Boeing Company is currently generating about -0.01 per unit of risk. If you would invest  4,528  in Focus Financial Partners on September 1, 2022 and sell it today you would lose (844.00)  from holding Focus Financial Partners or give up 18.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Focus Financial Partners  vs.  Boeing Company

 Performance (%) 
       Timeline  
Focus Financial Partners 
Focus Performance
0 of 100
Over the last 90 days Focus Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Focus Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Focus Price Channel

Boeing Company 
Boeing Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Focus Financial and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Focus Financial and Boeing

The main advantage of trading using opposite Focus Financial and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Financial position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
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The idea behind Focus Financial Partners and Boeing Company 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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Check out your portfolio center. 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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