Correlation Between Funko and Shimano

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

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

Diversification Opportunities for Funko and Shimano

0.17

Correlation Coefficient

Funko  Shimano

Average diversification

The 3 months correlation between Funko and Shimano is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of Funko i.e., Funko and Shimano go up and down completely randomly.

Pair Corralation between Funko and Shimano

Given the investment horizon of 90 days Funko Inc is expected to generate 0.97 times more return on investment than Shimano. However, Funko Inc is 1.03 times less risky than Shimano. It trades about 0.08 of its potential returns per unit of risk. Shimano is currently generating about -0.16 per unit of risk. If you would invest  1,033  in Funko Inc on September 3, 2024 and sell it today you would earn a total of  142.00  from holding Funko Inc or generate 13.75% 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.  Shimano

Funko Inc

Risk-Adjusted Performance

6 of 100

Modest

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.

Shimano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shimano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Funko and Shimano

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

The idea behind Funko Inc and Shimano 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.