Correlation Between Build A and Funko
Can any of the company-specific risk be diversified away by investing in both Build A and Funko 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 Build A and Funko into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Build A Bear Workshop and Funko Inc, you can compare the effects of market volatilities on Build A and Funko 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 Build A with a short position of Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Funko.
Diversification Opportunities for Build A and Funko
Poor diversification
The 3 months correlation between Build and Funko is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Build A 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 Build A Bear Workshop are associated (or correlated) with Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Build A i.e., Build A and Funko go up and down completely randomly.
Pair Corralation between Build A and Funko
Considering the 90-day investment horizon Build A is expected to generate 2.54 times less return on investment than Funko. In addition to that, Build A is 1.84 times more volatile than Funko Inc. It trades about 0.05 of its total potential returns per unit of risk. Funko Inc is currently generating about 0.24 per unit of volatility. If you would invest 1,031 in Funko Inc on October 19, 2024 and sell it today you would earn a total of 286.00 from holding Funko Inc or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Build A Bear Workshop vs. Funko Inc
Performance |
| Timeline |
| Build A Bear |
| Funko Inc |
Build A and Funko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Build A and Funko
The main advantage of trading using opposite Build A and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A position performs unexpectedly, Funko 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 Funko will offset losses from the drop in Funko's long position.The idea behind Build A Bear Workshop and Funko 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.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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