Correlation Between Malibu Boats and Clarus Corp

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

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

Diversification Opportunities for Malibu Boats and Clarus Corp

0.35

Correlation Coefficient

Malibu Boats  Clarus Corp

Weak diversification

The 3 months correlation between Malibu and Clarus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Clarus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarus Corp and Malibu Boats 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 Malibu Boats are associated (or correlated) with Clarus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarus Corp has no effect on the direction of Malibu Boats i.e., Malibu Boats and Clarus Corp go up and down completely randomly.

Pair Corralation between Malibu Boats and Clarus Corp

Given the investment horizon of 90 days Malibu Boats is expected to generate 7.32 times less return on investment than Clarus Corp. But when comparing it to its historical volatility, Malibu Boats is 1.34 times less risky than Clarus Corp. It trades about 0.04 of its potential returns per unit of risk. Clarus Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  428.00  in Clarus Corp on September 15, 2024 and sell it today you would earn a total of  75.00  from holding Clarus Corp or generate 17.52% return on investment over 90 days.

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

Malibu Boats  vs.  Clarus Corp

Malibu Boats

Risk-Adjusted Performance

5 of 100

Modest

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

Clarus Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clarus Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Clarus Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malibu Boats and Clarus Corp

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

The idea behind Malibu Boats and Clarus Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.