Correlation Between Funko and AMERICAN

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

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

Diversification Opportunities for Funko and AMERICAN

-0.53

Correlation Coefficient

Funko  AMERICAN

Excellent diversification

The 3 months correlation between Funko and AMERICAN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and AMERICAN INTL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN INTL GROUP 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN INTL GROUP has no effect on the direction of Funko i.e., Funko and AMERICAN go up and down completely randomly.

Pair Corralation between Funko and AMERICAN

Given the investment horizon of 90 days Funko is expected to generate 106.81 times less return on investment than AMERICAN. But when comparing it to its historical volatility, Funko Inc is 31.31 times less risky than AMERICAN. It trades about 0.03 of its potential returns per unit of risk. AMERICAN INTL GROUP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,176  in AMERICAN INTL GROUP on October 24, 2024 and sell it today you would earn a total of  266.00  from holding AMERICAN INTL GROUP or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.11%
Values	Daily Returns

Funko Inc  vs.  AMERICAN INTL GROUP

Funko Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

AMERICAN INTL GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMERICAN INTL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMERICAN INTL GROUP investors.

Pair Trading with Funko and AMERICAN

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

The idea behind Funko Inc and AMERICAN INTL GROUP 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 Stocks Directory module to find actively traded stocks across global markets.