Correlation Between Curtiss Motorcycles and Malibu Boats

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

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

Diversification Opportunities for Curtiss Motorcycles and Malibu Boats

0.36

Correlation Coefficient

Curtiss Motorcycles  Malibu Boats

Weak diversification

The 3 months correlation between Curtiss and Malibu is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Motorcycles and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats and Curtiss Motorcycles 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 Curtiss Motorcycles are associated (or correlated) with Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Curtiss Motorcycles i.e., Curtiss Motorcycles and Malibu Boats go up and down completely randomly.

Pair Corralation between Curtiss Motorcycles and Malibu Boats

Given the investment horizon of 90 days Curtiss Motorcycles is expected to generate 7.71 times more return on investment than Malibu Boats. However, Curtiss Motorcycles is 7.71 times more volatile than Malibu Boats. It trades about 0.05 of its potential returns per unit of risk. Malibu Boats is currently generating about -0.14 per unit of risk. If you would invest  3.60  in Curtiss Motorcycles on December 26, 2024 and sell it today you would lose (1.20) from holding Curtiss Motorcycles or give up 33.33% of portfolio value over 90 days.

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

Curtiss Motorcycles  vs.  Malibu Boats

Curtiss Motorcycles

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Motorcycles are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Curtiss Motorcycles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Malibu Boats

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Curtiss Motorcycles and Malibu Boats

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

The idea behind Curtiss Motorcycles and Malibu Boats 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..