Correlation Between Fox Factory and Lear
Can any of the company-specific risk be diversified away by investing in both Fox Factory and Lear 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 Fox Factory and Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Lear Corporation, you can compare the effects of market volatilities on Fox Factory and Lear 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 Fox Factory with a short position of Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Lear.
Diversification Opportunities for Fox Factory and Lear
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fox and Lear is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and Fox Factory 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 Fox Factory Holding are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Fox Factory i.e., Fox Factory and Lear go up and down completely randomly.
Pair Corralation between Fox Factory and Lear
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Lear. In addition to that, Fox Factory is 1.44 times more volatile than Lear Corporation. It trades about -0.13 of its total potential returns per unit of risk. Lear Corporation is currently generating about -0.15 per unit of volatility. If you would invest 11,598 in Lear Corporation on August 23, 2024 and sell it today you would lose (1,961) from holding Lear Corporation or give up 16.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. Lear Corp.
Performance |
| Timeline |
| Fox Factory Holding |
| Lear |
Fox Factory and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and Lear
The main advantage of trading using opposite Fox Factory and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |