Correlation Between Fox Factory and Hyzon Motors

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

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

Diversification Opportunities for Fox Factory and Hyzon Motors

0.79

Correlation Coefficient

Fox Factory  Hyzon Motors

Poor diversification

The 3 months correlation between Fox and Hyzon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors and Fox Factory 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 Fox Factory Holding are associated (or correlated) with Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Fox Factory i.e., Fox Factory and Hyzon Motors go up and down completely randomly.

Pair Corralation between Fox Factory and Hyzon Motors

Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Hyzon Motors. But the stock apears to be less risky and, when comparing its historical volatility, Fox Factory Holding is 2.61 times less risky than Hyzon Motors. The stock trades about -0.13 of its potential returns per unit of risk. The Hyzon Motors is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  235.00  in Hyzon Motors on September 14, 2024 and sell it today you would lose (47.00) from holding Hyzon Motors or give up 20.0% of portfolio value over 90 days.

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

Fox Factory Holding  vs.  Hyzon Motors

Fox Factory Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic 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.

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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 Fox Factory and Hyzon Motors

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

The idea behind Fox Factory Holding and Hyzon Motors 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.