Correlation Between Funko and Zapata Computing
Can any of the company-specific risk be diversified away by investing in both Funko and Zapata Computing 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 Zapata Computing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and Zapata Computing Holdings, you can compare the effects of market volatilities on Funko and Zapata Computing 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 Zapata Computing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Zapata Computing.
Diversification Opportunities for Funko and Zapata Computing
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Funko and Zapata is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing Holdings 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 Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of Funko i.e., Funko and Zapata Computing go up and down completely randomly.
Pair Corralation between Funko and Zapata Computing
Given the investment horizon of 90 days Funko is expected to generate 8.63 times less return on investment than Zapata Computing. But when comparing it to its historical volatility, Funko Inc is 13.9 times less risky than Zapata Computing. It trades about 0.08 of its potential returns per unit of risk. Zapata Computing Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Zapata Computing Holdings on September 19, 2024 and sell it today you would lose (24.44) from holding Zapata Computing Holdings or give up 97.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.38% |
| Values | Daily Returns |
Funko Inc vs. Zapata Computing Holdings
Performance |
| Timeline |
| Funko Inc |
| Zapata Computing Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Funko and Zapata Computing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and Zapata Computing
The main advantage of trading using opposite Funko and Zapata Computing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Zapata Computing 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 Zapata Computing will offset losses from the drop in Zapata Computing's long position.The idea behind Funko Inc and Zapata Computing 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.| Zapata Computing vs. National Beverage Corp | Zapata Computing vs. Constellation Brands Class | Zapata Computing vs. Biocardia | Zapata Computing vs. PepsiCo |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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