Correlation Between Fox Factory and PHINIA

Can any of the company-specific risk be diversified away by investing in both Fox Factory and PHINIA 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 PHINIA 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 PHINIA Inc, you can compare the effects of market volatilities on Fox Factory and PHINIA 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 PHINIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and PHINIA.

Diversification Opportunities for Fox Factory and PHINIA

-0.61

Correlation Coefficient

Fox Factory  PHINIA

Excellent diversification

The 3 months correlation between Fox and PHINIA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Fox Factory i.e., Fox Factory and PHINIA go up and down completely randomly.

Pair Corralation between Fox Factory and PHINIA

Given the investment horizon of 90 days Fox Factory Holding is expected to generate 1.58 times more return on investment than PHINIA. However, Fox Factory is 1.58 times more volatile than PHINIA Inc. It trades about -0.03 of its potential returns per unit of risk. PHINIA Inc is currently generating about -0.3 per unit of risk. If you would invest  3,080  in Fox Factory Holding on October 6, 2024 and sell it today you would lose (63.00) from holding Fox Factory Holding or give up 2.05% of portfolio value over 90 days.

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

Fox Factory Holding  vs.  PHINIA Inc

Fox Factory Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PHINIA Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, PHINIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fox Factory and PHINIA

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

The idea behind Fox Factory Holding and PHINIA Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.