Correlation Between Peloton Interactive and Callaway Golf
Can any of the company-specific risk be diversified away by investing in both Peloton Interactive and Callaway Golf 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 Peloton Interactive and Callaway Golf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Interactive and Callaway Golf, you can compare the effects of market volatilities on Peloton Interactive and Callaway Golf 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 Peloton Interactive with a short position of Callaway Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Interactive and Callaway Golf.
Diversification Opportunities for Peloton Interactive and Callaway Golf
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Peloton and Callaway is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf and Peloton Interactive 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 Peloton Interactive are associated (or correlated) with Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of Peloton Interactive i.e., Peloton Interactive and Callaway Golf go up and down completely randomly.
Pair Corralation between Peloton Interactive and Callaway Golf
Given the investment horizon of 90 days Peloton Interactive is expected to generate 2.48 times more return on investment than Callaway Golf. However, Peloton Interactive is 2.48 times more volatile than Callaway Golf. It trades about 0.28 of its potential returns per unit of risk. Callaway Golf is currently generating about -0.16 per unit of risk. If you would invest 640.00 in Peloton Interactive on August 28, 2024 and sell it today you would earn a total of 318.00 from holding Peloton Interactive or generate 49.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peloton Interactive vs. Callaway Golf
Performance |
| Timeline |
| Peloton Interactive |
| Callaway Golf |
Peloton Interactive and Callaway Golf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peloton Interactive and Callaway Golf
The main advantage of trading using opposite Peloton Interactive and Callaway Golf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Interactive position performs unexpectedly, Callaway Golf 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 Callaway Golf will offset losses from the drop in Callaway Golf's long position.| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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