Correlation Between Apogee Enterprises and Funko

Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises 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 Apogee Enterprises and Funko into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apogee Enterprises and Funko Inc, you can compare the effects of market volatilities on Apogee Enterprises 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 Apogee Enterprises with a short position of Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Funko.

Diversification Opportunities for Apogee Enterprises and Funko

-0.3

Correlation Coefficient

Apogee Enterprises  Funko

Very good diversification

The 3 months correlation between Apogee and Funko is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises i.e., Apogee Enterprises and Funko go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Funko

Given the investment horizon of 90 days Apogee Enterprises is expected to under-perform the Funko. But the stock apears to be less risky and, when comparing its historical volatility, Apogee Enterprises is 1.85 times less risky than Funko. The stock trades about -0.23 of its potential returns per unit of risk. The Funko Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Funko Inc on September 17, 2024 and sell it today you would earn a total of  140.00  from holding Funko Inc or generate 13.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apogee Enterprises  vs.  Funko Inc

Apogee Enterprises

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Funko Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Apogee Enterprises and Funko

The main advantage of trading using opposite Apogee Enterprises and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises 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.

The idea behind Apogee Enterprises and Funko Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.