Correlation Between Commercial Vehicle and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and Fox Factory 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 Commercial Vehicle and Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and Fox Factory Holding, you can compare the effects of market volatilities on Commercial Vehicle and Fox Factory 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 Commercial Vehicle with a short position of Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Fox Factory.
Diversification Opportunities for Commercial Vehicle and Fox Factory
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commercial and Fox is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Fox Factory go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Fox Factory
Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Fox Factory. In addition to that, Commercial Vehicle is 2.82 times more volatile than Fox Factory Holding. It trades about -0.12 of its total potential returns per unit of risk. Fox Factory Holding is currently generating about -0.25 per unit of volatility. If you would invest 3,702 in Fox Factory Holding on August 24, 2024 and sell it today you would lose (480.00) from holding Fox Factory Holding or give up 12.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Fox Factory Holding
Performance |
| Timeline |
| Commercial Vehicle |
| Fox Factory Holding |
Commercial Vehicle and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Fox Factory
The main advantage of trading using opposite Commercial Vehicle and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries International |
| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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