Correlation Between Funko and Willamette Valley

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

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

Diversification Opportunities for Funko and Willamette Valley

0.46

Correlation Coefficient

Funko  Willamette Valley

Very weak diversification

The 3 months correlation between Funko and Willamette is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Funko i.e., Funko and Willamette Valley go up and down completely randomly.

Pair Corralation between Funko and Willamette Valley

Given the investment horizon of 90 days Funko Inc is expected to generate 2.18 times more return on investment than Willamette Valley. However, Funko is 2.18 times more volatile than Willamette Valley Vineyards. It trades about 0.3 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.03 per unit of risk. If you would invest  1,061  in Funko Inc on September 23, 2024 and sell it today you would earn a total of  188.00  from holding Funko Inc or generate 17.72% return on investment over 90 days.

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

Funko Inc  vs.  Willamette Valley Vineyards

Funko Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Willamette Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Funko and Willamette Valley

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

The idea behind Funko Inc and Willamette Valley Vineyards 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 Commodity Directory module to find actively traded commodities issued by global exchanges.