Correlation Between HE Equipment and Funko
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Funko 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 HE Equipment and Funko into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Funko Inc, you can compare the effects of market volatilities on HE Equipment and Funko 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 HE Equipment with a short position of Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Funko.
Diversification Opportunities for HE Equipment and Funko
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HEES and Funko is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and HE Equipment 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 HE Equipment Services are associated (or correlated) with Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of HE Equipment i.e., HE Equipment and Funko go up and down completely randomly.
Pair Corralation between HE Equipment and Funko
Given the investment horizon of 90 days HE Equipment is expected to generate 2.49 times less return on investment than Funko. But when comparing it to its historical volatility, HE Equipment Services is 1.05 times less risky than Funko. It trades about 0.02 of its potential returns per unit of risk. Funko Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,222 in Funko Inc on September 29, 2024 and sell it today you would earn a total of 102.00 from holding Funko Inc or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Funko Inc
Performance |
| Timeline |
| HE Equipment Services |
| Funko Inc |
HE Equipment and Funko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Funko
The main advantage of trading using opposite HE Equipment and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Funko 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 Funko will offset losses from the drop in Funko's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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