Correlation Between Funko and TheRealReal
Can any of the company-specific risk be diversified away by investing in both Funko and TheRealReal 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 TheRealReal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and TheRealReal, you can compare the effects of market volatilities on Funko and TheRealReal 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 TheRealReal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and TheRealReal.
Diversification Opportunities for Funko and TheRealReal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Funko and TheRealReal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and TheRealReal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TheRealReal 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 TheRealReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TheRealReal has no effect on the direction of Funko i.e., Funko and TheRealReal go up and down completely randomly.
Pair Corralation between Funko and TheRealReal
Given the investment horizon of 90 days Funko Inc is expected to generate 0.58 times more return on investment than TheRealReal. However, Funko Inc is 1.71 times less risky than TheRealReal. It trades about 0.08 of its potential returns per unit of risk. TheRealReal is currently generating about -0.06 per unit of risk. If you would invest 1,361 in Funko Inc on November 2, 2024 and sell it today you would earn a total of 39.00 from holding Funko Inc or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Funko Inc vs. TheRealReal
Performance |
| Timeline |
| Funko Inc |
| TheRealReal |
Funko and TheRealReal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and TheRealReal
The main advantage of trading using opposite Funko and TheRealReal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, TheRealReal 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 TheRealReal will offset losses from the drop in TheRealReal's long position.The idea behind Funko Inc and TheRealReal 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.| TheRealReal vs. Capri Holdings | TheRealReal vs. Movado Group | TheRealReal vs. Tapestry | TheRealReal vs. Brilliant Earth 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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