Correlation Between Funko and Purecycle Technologies

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

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

Diversification Opportunities for Funko and Purecycle Technologies

-0.13

Correlation Coefficient

Funko  Purecycle Technologies

Good diversification

The 3 months correlation between Funko and Purecycle is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Purecycle Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purecycle Technologies and Funko 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 Funko Inc are associated (or correlated) with Purecycle Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purecycle Technologies has no effect on the direction of Funko i.e., Funko and Purecycle Technologies go up and down completely randomly.

Pair Corralation between Funko and Purecycle Technologies

Given the investment horizon of 90 days Funko is expected to generate 3.72 times less return on investment than Purecycle Technologies. But when comparing it to its historical volatility, Funko Inc is 2.21 times less risky than Purecycle Technologies. It trades about 0.07 of its potential returns per unit of risk. Purecycle Technologies Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Purecycle Technologies Holdings on September 14, 2024 and sell it today you would earn a total of  315.00  from holding Purecycle Technologies Holdings or generate 35.39% return on investment over 90 days.

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

Funko Inc  vs.  Purecycle Technologies Holding

Funko Inc

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Purecycle Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purecycle Technologies Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Purecycle Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Funko and Purecycle Technologies

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

The idea behind Funko Inc and Purecycle Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.