Correlation Between Macys and Funko

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

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

Diversification Opportunities for Macys and Funko

0.25

Correlation Coefficient

Macys  Funko

Modest diversification

The 3 months correlation between Macys and Funko is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Macys 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 Macys Inc 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 Macys i.e., Macys and Funko go up and down completely randomly.

Pair Corralation between Macys and Funko

Taking into account the 90-day investment horizon Macys is expected to generate 4.3 times less return on investment than Funko. But when comparing it to its historical volatility, Macys Inc is 1.25 times less risky than Funko. It trades about 0.01 of its potential returns per unit of risk. Funko Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,084  in Funko Inc on September 24, 2024 and sell it today you would earn a total of  165.00  from holding Funko Inc or generate 15.22% return on investment over 90 days.

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

Macys Inc  vs.  Funko Inc

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Macys and Funko

The main advantage of trading using opposite Macys and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys 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 Macys Inc 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.