Correlation Between Solo Brands and MCBC Holdings

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

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

Diversification Opportunities for Solo Brands and MCBC Holdings

-0.25

Correlation Coefficient

Solo Brands  MCBC Holdings

Very good diversification

The 3 months correlation between Solo and MCBC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings and Solo Brands 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 Solo Brands are associated (or correlated) with MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Solo Brands i.e., Solo Brands and MCBC Holdings go up and down completely randomly.

Pair Corralation between Solo Brands and MCBC Holdings

Considering the 90-day investment horizon Solo Brands is expected to generate 1.44 times more return on investment than MCBC Holdings. However, Solo Brands is 1.44 times more volatile than MCBC Holdings. It trades about -0.1 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.33 per unit of risk. If you would invest  118.00  in Solo Brands on October 10, 2024 and sell it today you would lose (7.00) from holding Solo Brands or give up 5.93% of portfolio value over 90 days.

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

Solo Brands  vs.  MCBC Holdings

Solo Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solo Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MCBC Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MCBC Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Solo Brands and MCBC Holdings

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

The idea behind Solo Brands and MCBC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.