Correlation Between Funko and BRP

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

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

Diversification Opportunities for Funko and BRP

0.6

Correlation Coefficient

Funko  BRP

Poor diversification

The 3 months correlation between Funko and BRP is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Funko 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 Funko Inc are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Funko i.e., Funko and BRP go up and down completely randomly.

Pair Corralation between Funko and BRP

Given the investment horizon of 90 days Funko Inc is expected to generate 1.22 times more return on investment than BRP. However, Funko is 1.22 times more volatile than BRP Inc. It trades about 0.04 of its potential returns per unit of risk. BRP Inc is currently generating about -0.09 per unit of risk. If you would invest  1,199  in Funko Inc on September 21, 2024 and sell it today you would earn a total of  49.00  from holding Funko Inc or generate 4.09% return on investment over 90 days.

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

Funko Inc  vs.  BRP Inc

Funko Inc

Risk-Adjusted Performance

2 of 100

Very 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.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Funko and BRP

The main advantage of trading using opposite Funko and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.

The idea behind Funko Inc and BRP 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.