Correlation Between Solo Brands and Phonex

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

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

Diversification Opportunities for Solo Brands and Phonex

-0.71

Correlation Coefficient

Solo Brands  Phonex

Pay attention - limited upside

The 3 months correlation between Solo and Phonex is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and Phonex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phonex Inc 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 Phonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phonex Inc has no effect on the direction of Solo Brands i.e., Solo Brands and Phonex go up and down completely randomly.

Pair Corralation between Solo Brands and Phonex

Considering the 90-day investment horizon Solo Brands is expected to under-perform the Phonex. In addition to that, Solo Brands is 1.12 times more volatile than Phonex Inc. It trades about -0.25 of its total potential returns per unit of risk. Phonex Inc is currently generating about 0.05 per unit of volatility. If you would invest  117.00  in Phonex Inc on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Phonex Inc or generate 5.13% return on investment over 90 days.

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

Solo Brands  vs.  Phonex Inc

Solo Brands

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Phonex Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phonex Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Phonex demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solo Brands and Phonex

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

The idea behind Solo Brands and Phonex 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.