Correlation Between Funko and Noble Plc

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

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

Diversification Opportunities for Funko and Noble Plc

0.01

Correlation Coefficient

Funko  Noble Plc

Significant diversification

The 3 months correlation between Funko and Noble is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Funko i.e., Funko and Noble Plc go up and down completely randomly.

Pair Corralation between Funko and Noble Plc

Given the investment horizon of 90 days Funko Inc is expected to generate 1.24 times more return on investment than Noble Plc. However, Funko is 1.24 times more volatile than Noble plc. It trades about 0.08 of its potential returns per unit of risk. Noble plc is currently generating about 0.0 per unit of risk. If you would invest  1,023  in Funko Inc on September 4, 2024 and sell it today you would earn a total of  138.00  from holding Funko Inc or generate 13.49% return on investment over 90 days.

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

Funko Inc  vs.  Noble plc

Funko Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Noble Plc is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Funko and Noble Plc

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

The idea behind Funko Inc and Noble plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.