Correlation Between Transportadora and Funko

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

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

Diversification Opportunities for Transportadora and Funko

-0.31

Correlation Coefficient

Transportadora  Funko

Very good diversification

The 3 months correlation between Transportadora and Funko is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Transportadora 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 Transportadora de Gas are associated (or correlated) with Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Transportadora i.e., Transportadora and Funko go up and down completely randomly.

Pair Corralation between Transportadora and Funko

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 0.93 times more return on investment than Funko. However, Transportadora de Gas is 1.07 times less risky than Funko. It trades about 0.26 of its potential returns per unit of risk. Funko Inc is currently generating about 0.08 per unit of risk. If you would invest  1,918  in Transportadora de Gas on September 2, 2024 and sell it today you would earn a total of  1,054  from holding Transportadora de Gas or generate 54.95% return on investment over 90 days.

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

Transportadora de Gas  vs.  Funko Inc

Transportadora de Gas

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Funko

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

The idea behind Transportadora de Gas and Funko Inc 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.