Correlation Between Standard and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Standard and Fox Factory 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 Standard and Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Motor Products and Fox Factory Holding, you can compare the effects of market volatilities on Standard and Fox Factory 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 Standard with a short position of Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard and Fox Factory.
Diversification Opportunities for Standard and Fox Factory
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Standard and Fox is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Standard Motor Products and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and Standard 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 Standard Motor Products are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Standard i.e., Standard and Fox Factory go up and down completely randomly.
Pair Corralation between Standard and Fox Factory
Considering the 90-day investment horizon Standard Motor Products is expected to generate 0.6 times more return on investment than Fox Factory. However, Standard Motor Products is 1.68 times less risky than Fox Factory. It trades about 0.03 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.09 per unit of risk. If you would invest 3,102 in Standard Motor Products on October 20, 2024 and sell it today you would earn a total of 19.00 from holding Standard Motor Products or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Motor Products vs. Fox Factory Holding
Performance |
| Timeline |
| Standard Motor Products |
| Fox Factory Holding |
Standard and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard and Fox Factory
The main advantage of trading using opposite Standard and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |