Correlation Between Funko and Air Transport
Can any of the company-specific risk be diversified away by investing in both Funko and Air Transport 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 Funko and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and Air Transport Services, you can compare the effects of market volatilities on Funko and Air Transport 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 Funko with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Air Transport.
Diversification Opportunities for Funko and Air Transport
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Funko and Air is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Funko 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 Funko Inc are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Funko i.e., Funko and Air Transport go up and down completely randomly.
Pair Corralation between Funko and Air Transport
Given the investment horizon of 90 days Funko Inc is expected to generate 24.0 times more return on investment than Air Transport. However, Funko is 24.0 times more volatile than Air Transport Services. It trades about 0.05 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.06 per unit of risk. If you would invest 1,151 in Funko Inc on September 4, 2024 and sell it today you would earn a total of 32.00 from holding Funko Inc or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Funko Inc vs. Air Transport Services
Performance |
| Timeline |
| Funko Inc |
| Air Transport Services |
Funko and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and Air Transport
The main advantage of trading using opposite Funko and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.The idea behind Funko Inc and Air Transport Services 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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