Correlation Between Carnival Plc and Funko

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

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

Diversification Opportunities for Carnival Plc and Funko

-0.45

Correlation Coefficient

Carnival Plc  Funko

Very good diversification

The 3 months correlation between Carnival and Funko is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Carnival plc and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Carnival Plc 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 Carnival plc 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 Carnival Plc i.e., Carnival Plc and Funko go up and down completely randomly.

Pair Corralation between Carnival Plc and Funko

Assuming the 90 days horizon Carnival plc is expected to generate 2.67 times more return on investment than Funko. However, Carnival Plc is 2.67 times more volatile than Funko Inc. It trades about 0.16 of its potential returns per unit of risk. Funko Inc is currently generating about 0.0 per unit of risk. If you would invest  1,285  in Carnival plc on September 13, 2024 and sell it today you would earn a total of  995.00  from holding Carnival plc or generate 77.43% return on investment over 90 days.

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

Carnival plc  vs.  Funko Inc

Carnival plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carnival Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Funko Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Funko Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Carnival Plc and Funko

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

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.