Correlation Between Falcons Beyond and European Wax

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

By analyzing existing cross correlation between Falcons Beyond Global, and European Wax Center, you can compare the effects of market volatilities on Falcons Beyond and European Wax 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 Falcons Beyond with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and European Wax.

Diversification Opportunities for Falcons Beyond and European Wax

-0.32

Correlation Coefficient

Falcons Beyond  European Wax

Very good diversification

The 3 months correlation between Falcons and European is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center and Falcons Beyond 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 Falcons Beyond Global, are associated (or correlated) with European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Falcons Beyond i.e., Falcons Beyond and European Wax go up and down completely randomly.

Pair Corralation between Falcons Beyond and European Wax

Given the investment horizon of 90 days Falcons Beyond Global, is expected to generate 2.4 times more return on investment than European Wax. However, Falcons Beyond is 2.4 times more volatile than European Wax Center. It trades about 0.04 of its potential returns per unit of risk. European Wax Center is currently generating about 0.03 per unit of risk. If you would invest  794.00  in Falcons Beyond Global, on October 6, 2024 and sell it today you would lose (2.00) from holding Falcons Beyond Global, or give up 0.25% of portfolio value over 90 days.

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

Falcons Beyond Global,  vs.  European Wax Center

Falcons Beyond Global,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Falcons Beyond may actually be approaching a critical reversion point that can send shares even higher in February 2025.

European Wax Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Wax Center has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, European Wax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Falcons Beyond and European Wax

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

The idea behind Falcons Beyond Global, and European Wax Center 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.