Correlation Between Funko and Peloton Interactive

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

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

Diversification Opportunities for Funko and Peloton Interactive

-0.3

Correlation Coefficient

Funko  Peloton Interactive

Very good diversification

The 3 months correlation between Funko and Peloton is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive 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 Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Funko i.e., Funko and Peloton Interactive go up and down completely randomly.

Pair Corralation between Funko and Peloton Interactive

Given the investment horizon of 90 days Funko is expected to generate 5.74 times less return on investment than Peloton Interactive. But when comparing it to its historical volatility, Funko Inc is 1.5 times less risky than Peloton Interactive. It trades about 0.04 of its potential returns per unit of risk. Peloton Interactive is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  858.00  in Peloton Interactive on September 12, 2024 and sell it today you would earn a total of  92.00  from holding Peloton Interactive or generate 10.72% return on investment over 90 days.

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

Funko Inc  vs.  Peloton Interactive

Funko Inc

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 1 (%) 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 newest stock price disarray, may contribute to short-term losses for the investors.

Peloton Interactive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peloton Interactive are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Peloton Interactive displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Funko and Peloton Interactive

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

The idea behind Funko Inc and Peloton Interactive 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.