Correlation Between Vista Outdoor and Funko

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

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

Diversification Opportunities for Vista Outdoor and Funko

0.16

Correlation Coefficient

Vista Outdoor  Funko

Average diversification

The 3 months correlation between Vista and Funko is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Vista Outdoor 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 Vista Outdoor 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 Vista Outdoor i.e., Vista Outdoor and Funko go up and down completely randomly.

Pair Corralation between Vista Outdoor and Funko

Given the investment horizon of 90 days Vista Outdoor is expected to generate 1.09 times less return on investment than Funko. But when comparing it to its historical volatility, Vista Outdoor is 1.97 times less risky than Funko. It trades about 0.15 of its potential returns per unit of risk. Funko Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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	96.88%
Values	Daily Returns

Vista Outdoor  vs.  Funko Inc

Vista Outdoor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Outdoor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vista Outdoor displayed 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 uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Outdoor and Funko

The main advantage of trading using opposite Vista Outdoor and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Outdoor 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 Vista Outdoor 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.