Correlation Between Fox Factory and GM

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Fox Factory Holding  vs.  General Motors

 Performance 
       Timeline  
Fox Factory Holding 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
General Motors 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.
The idea behind Fox Factory Holding and General Motors 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes