Correlation Between Armada Hflr and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Malibu Boats 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 Armada Hflr and Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Malibu Boats, you can compare the effects of market volatilities on Armada Hflr and Malibu Boats 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 Armada Hflr with a short position of Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Malibu Boats.
Diversification Opportunities for Armada Hflr and Malibu Boats
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armada and Malibu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Armada Hflr i.e., Armada Hflr and Malibu Boats go up and down completely randomly.
Pair Corralation between Armada Hflr and Malibu Boats
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Malibu Boats. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 3.39 times less risky than Malibu Boats. The stock trades about -0.13 of its potential returns per unit of risk. The Malibu Boats is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,102 in Malibu Boats on September 18, 2024 and sell it today you would lose (59.00) from holding Malibu Boats or give up 1.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Armada Hflr Pr vs. Malibu Boats
Performance |
Timeline |
Armada Hflr Pr |
Malibu Boats |
Armada Hflr and Malibu Boats Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Armada Hflr and Malibu Boats
The main advantage of trading using opposite Armada Hflr and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.The idea behind Armada Hflr Pr and Malibu Boats 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.Malibu Boats vs. Polaris Industries | Malibu Boats vs. MCBC Holdings | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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