Correlation Between Launch One and Funko

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

By analyzing existing cross correlation between Launch One Acquisition and Funko Inc, you can compare the effects of market volatilities on Launch One and Funko 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 Launch One with a short position of Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Launch One and Funko.

Diversification Opportunities for Launch One and Funko

0.25

Correlation Coefficient

Launch One  Funko

Modest diversification

The 3 months correlation between Launch and Funko is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Launch One Acquisition and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Launch One 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 Launch One Acquisition are associated (or correlated) with Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Launch One i.e., Launch One and Funko go up and down completely randomly.

Pair Corralation between Launch One and Funko

Given the investment horizon of 90 days Launch One is expected to generate 36.93 times less return on investment than Funko. But when comparing it to its historical volatility, Launch One Acquisition is 41.79 times less risky than Funko. It trades about 0.12 of its potential returns per unit of risk. Funko Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  682.00  in Funko Inc on October 9, 2024 and sell it today you would earn a total of  702.00  from holding Funko Inc or generate 102.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.63%
Values	Daily Returns

Launch One Acquisition  vs.  Funko Inc

Launch One Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Launch One is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Funko Inc

Risk-Adjusted Performance

6 of 100

OK

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.

Pair Trading with Launch One and Funko

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

The idea behind Launch One Acquisition and Funko 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.

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.