Correlation Between Funko and CERo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Funko and CERo Therapeutics 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 CERo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and CERo Therapeutics Holdings, you can compare the effects of market volatilities on Funko and CERo Therapeutics 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 CERo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and CERo Therapeutics.
Diversification Opportunities for Funko and CERo Therapeutics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Funko and CERo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics 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 CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of Funko i.e., Funko and CERo Therapeutics go up and down completely randomly.
Pair Corralation between Funko and CERo Therapeutics
Given the investment horizon of 90 days Funko Inc is expected to under-perform the CERo Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Funko Inc is 8.12 times less risky than CERo Therapeutics. The stock trades about -0.04 of its potential returns per unit of risk. The CERo Therapeutics Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 0.84 in CERo Therapeutics Holdings on October 26, 2024 and sell it today you would earn a total of 0.75 from holding CERo Therapeutics Holdings or generate 89.29% 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. CERo Therapeutics Holdings
Performance |
| Timeline |
| Funko Inc |
| CERo Therapeutics |
Funko and CERo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and CERo Therapeutics
The main advantage of trading using opposite Funko and CERo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, CERo Therapeutics 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 CERo Therapeutics will offset losses from the drop in CERo Therapeutics' long position.The idea behind Funko Inc and CERo Therapeutics Holdings 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.| CERo Therapeutics vs. Unum Group | CERo Therapeutics vs. Funko Inc | CERo Therapeutics vs. United Fire Group | CERo Therapeutics vs. Selective Insurance Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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