Correlation Between Focus Home and Tri Pointe

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

Diversification Opportunities for Focus Home and Tri Pointe

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Focus and Tri is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Tri Pointe Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Pointe Homes and Focus Home 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 Home Interactive are associated (or correlated) with Tri Pointe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Pointe Homes has no effect on the direction of Focus Home i.e., Focus Home and Tri Pointe go up and down completely randomly.

Pair Corralation between Focus Home and Tri Pointe

Assuming the 90 days horizon Focus Home Interactive is expected to generate 1.63 times more return on investment than Tri Pointe. However, Focus Home is 1.63 times more volatile than Tri Pointe Homes. It trades about 0.2 of its potential returns per unit of risk. Tri Pointe Homes is currently generating about 0.04 per unit of risk. If you would invest  1,602  in Focus Home Interactive on April 23, 2025 and sell it today you would earn a total of  763.00  from holding Focus Home Interactive or generate 47.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Focus Home Interactive  vs.  Tri Pointe Homes

 Performance 
       Timeline  
Focus Home Interactive 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Focus Home reported solid returns over the last few months and may actually be approaching a breakup point.
Tri Pointe Homes 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tri Pointe Homes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tri Pointe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Focus Home and Tri Pointe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Focus Home and Tri Pointe

The main advantage of trading using opposite Focus Home and Tri Pointe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Tri Pointe 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 Tri Pointe will offset losses from the drop in Tri Pointe's long position.
The idea behind Focus Home Interactive and Tri Pointe Homes 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.
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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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