Correlation Between Fox Factory and GM
Can any of the company-specific risk be diversified away by investing in both Fox Factory and GM 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 Fox Factory and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and General Motors, you can compare the effects of market volatilities on Fox Factory and GM 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 Fox Factory with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and GM.
Diversification Opportunities for Fox Factory and GM
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fox and GM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Fox Factory 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 Fox Factory Holding are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Fox Factory i.e., Fox Factory and GM go up and down completely randomly.
Pair Corralation between Fox Factory and GM
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the GM. In addition to that, Fox Factory is 1.08 times more volatile than General Motors. It trades about -0.14 of its total potential returns per unit of risk. General Motors is currently generating about -0.13 per unit of volatility. If you would invest 5,538 in General Motors on November 27, 2024 and sell it today you would lose (864.00) from holding General Motors or give up 15.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fox Factory Holding vs. General Motors
Performance |
Timeline |
Fox Factory Holding |
General Motors |
Fox Factory and GM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fox Factory and GM
The main advantage of trading using opposite Fox Factory and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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