Correlation Between Funko and ALLSTATE

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

By analyzing existing cross correlation between Funko Inc and ALLSTATE P 328, you can compare the effects of market volatilities on Funko and ALLSTATE 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 ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and ALLSTATE.

Diversification Opportunities for Funko and ALLSTATE

-0.26

Correlation Coefficient

Funko  ALLSTATE

Very good diversification

The 3 months correlation between Funko and ALLSTATE is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and ALLSTATE P 328 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 328 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 ALLSTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLSTATE P 328 has no effect on the direction of Funko i.e., Funko and ALLSTATE go up and down completely randomly.

Pair Corralation between Funko and ALLSTATE

Given the investment horizon of 90 days Funko Inc is expected to generate 5.52 times more return on investment than ALLSTATE. However, Funko is 5.52 times more volatile than ALLSTATE P 328. It trades about 0.27 of its potential returns per unit of risk. ALLSTATE P 328 is currently generating about -0.22 per unit of risk. If you would invest  1,182  in Funko Inc on October 5, 2024 and sell it today you would earn a total of  179.00  from holding Funko Inc or generate 15.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Funko Inc  vs.  ALLSTATE P 328

Funko Inc

Risk-Adjusted Performance

5 of 100

Modest

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 uncertain forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ALLSTATE P 328

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 328 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Funko and ALLSTATE

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

The idea behind Funko Inc and ALLSTATE P 328 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.