Correlation Between Callaway Golf and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both Callaway Golf and Peloton Interactive 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 Callaway Golf and Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callaway Golf and Peloton Interactive, you can compare the effects of market volatilities on Callaway Golf and Peloton Interactive 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 Callaway Golf with a short position of Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callaway Golf and Peloton Interactive.
Diversification Opportunities for Callaway Golf and Peloton Interactive
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Callaway and Peloton is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Callaway Golf and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and Callaway Golf 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 Callaway Golf are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Callaway Golf i.e., Callaway Golf and Peloton Interactive go up and down completely randomly.
Pair Corralation between Callaway Golf and Peloton Interactive
Given the investment horizon of 90 days Callaway Golf is expected to under-perform the Peloton Interactive. But the stock apears to be less risky and, when comparing its historical volatility, Callaway Golf is 1.96 times less risky than Peloton Interactive. The stock trades about -0.05 of its potential returns per unit of risk. The Peloton Interactive is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,185 in Peloton Interactive on August 28, 2024 and sell it today you would lose (227.00) from holding Peloton Interactive or give up 19.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Callaway Golf vs. Peloton Interactive
Performance |
| Timeline |
| Callaway Golf |
| Peloton Interactive |
Callaway Golf and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callaway Golf and Peloton Interactive
The main advantage of trading using opposite Callaway Golf and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callaway Golf position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive's long position.| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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