Correlation Between Globalfoundries and Boot Barn

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

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

Diversification Opportunities for Globalfoundries and Boot Barn

-0.24

Correlation Coefficient

Globalfoundries  Boot Barn

Very good diversification

The 3 months correlation between Globalfoundries and Boot is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings and Globalfoundries 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 Globalfoundries are associated (or correlated) with Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Globalfoundries i.e., Globalfoundries and Boot Barn go up and down completely randomly.

Pair Corralation between Globalfoundries and Boot Barn

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Boot Barn. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.12 times less risky than Boot Barn. The stock trades about -0.01 of its potential returns per unit of risk. The Boot Barn Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,844  in Boot Barn Holdings on September 30, 2024 and sell it today you would earn a total of  8,823  from holding Boot Barn Holdings or generate 128.92% return on investment over 90 days.

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

Globalfoundries  vs.  Boot Barn Holdings

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boot Barn Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Boot Barn is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Globalfoundries and Boot Barn

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

The idea behind Globalfoundries and Boot Barn Holdings 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.