Correlation Between Malibu Boats and Life Electric
Can any of the company-specific risk be diversified away by investing in both Malibu Boats and Life Electric 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 Malibu Boats and Life Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malibu Boats and Life Electric Vehicles, you can compare the effects of market volatilities on Malibu Boats and Life Electric 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 Malibu Boats with a short position of Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malibu Boats and Life Electric.
Diversification Opportunities for Malibu Boats and Life Electric
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Malibu and Life is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles and Malibu Boats 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 Malibu Boats are associated (or correlated) with Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of Malibu Boats i.e., Malibu Boats and Life Electric go up and down completely randomly.
Pair Corralation between Malibu Boats and Life Electric
Given the investment horizon of 90 days Malibu Boats is expected to under-perform the Life Electric. But the stock apears to be less risky and, when comparing its historical volatility, Malibu Boats is 3.9 times less risky than Life Electric. The stock trades about -0.02 of its potential returns per unit of risk. The Life Electric Vehicles is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Life Electric Vehicles on August 31, 2024 and sell it today you would lose (29.00) from holding Life Electric Vehicles or give up 53.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Malibu Boats vs. Life Electric Vehicles
Performance |
| Timeline |
| Malibu Boats |
| Life Electric Vehicles |
Malibu Boats and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malibu Boats and Life Electric
The main advantage of trading using opposite Malibu Boats and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats position performs unexpectedly, Life Electric 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 Life Electric will offset losses from the drop in Life Electric's long position.| Malibu Boats vs. Polaris Industries | Malibu Boats vs. MCBC Holdings | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
| Life Electric vs. Volkswagen AG 110 | Life Electric vs. Stellantis NV | Life Electric vs. Toyota Motor | Life Electric vs. Honda Motor Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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