Correlation Between Funko and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Funko and Civitas Resources 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 Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and Civitas Resources, you can compare the effects of market volatilities on Funko and Civitas Resources 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 Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Civitas Resources.
Diversification Opportunities for Funko and Civitas Resources
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Funko and Civitas is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Funko i.e., Funko and Civitas Resources go up and down completely randomly.
Pair Corralation between Funko and Civitas Resources
Given the investment horizon of 90 days Funko Inc is expected to under-perform the Civitas Resources. But the stock apears to be less risky and, when comparing its historical volatility, Funko Inc is 1.14 times less risky than Civitas Resources. The stock trades about -0.54 of its potential returns per unit of risk. The Civitas Resources is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Civitas Resources on December 8, 2024 and sell it today you would earn a total of 0.40 from holding Civitas Resources or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Funko Inc vs. Civitas Resources
Performance |
| Timeline |
| Funko Inc |
| Civitas Resources |
Funko and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and Civitas Resources
The main advantage of trading using opposite Funko and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Civitas Resources 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.The idea behind Funko Inc and Civitas Resources 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.| Civitas Resources vs. Essent Group | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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