Correlation Between Superior Industries and Fox Factory

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

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

Diversification Opportunities for Superior Industries and Fox Factory

0.92

Correlation Coefficient

Superior Industries  Fox Factory

Almost no diversification

The 3 months correlation between Superior and Fox is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and Superior Industries 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 Superior Industries International are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Superior Industries i.e., Superior Industries and Fox Factory go up and down completely randomly.

Pair Corralation between Superior Industries and Fox Factory

Considering the 90-day investment horizon Superior Industries International is expected to under-perform the Fox Factory. In addition to that, Superior Industries is 1.18 times more volatile than Fox Factory Holding. It trades about -0.22 of its total potential returns per unit of risk. Fox Factory Holding is currently generating about -0.21 per unit of volatility. If you would invest  4,181  in Fox Factory Holding on September 27, 2024 and sell it today you would lose (1,209) from holding Fox Factory Holding or give up 28.92% of portfolio value over 90 days.

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

Superior Industries Internatio  vs.  Fox Factory Holding

Superior Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Superior Industries and Fox Factory

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

The idea behind Superior Industries International and Fox Factory Holding 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 Valuation module to check real value of public entities based on technical and fundamental data.