Correlation Between Malibu Boats and Charles Colvard

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

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

Diversification Opportunities for Malibu Boats and Charles Colvard

0.71

Correlation Coefficient

Malibu Boats  Charles Colvard

Poor diversification

The 3 months correlation between Malibu and Charles is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Charles Colvard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Colvard 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 Charles Colvard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Colvard has no effect on the direction of Malibu Boats i.e., Malibu Boats and Charles Colvard go up and down completely randomly.

Pair Corralation between Malibu Boats and Charles Colvard

Given the investment horizon of 90 days Malibu Boats is expected to generate 0.56 times more return on investment than Charles Colvard. However, Malibu Boats is 1.78 times less risky than Charles Colvard. It trades about -0.12 of its potential returns per unit of risk. Charles Colvard is currently generating about -0.13 per unit of risk. If you would invest  3,743  in Malibu Boats on December 20, 2024 and sell it today you would lose (662.00) from holding Malibu Boats or give up 17.69% of portfolio value over 90 days.

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

Malibu Boats  vs.  Charles Colvard

Malibu Boats

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malibu Boats 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Charles Colvard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Malibu Boats and Charles Colvard

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

The idea behind Malibu Boats and Charles Colvard 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.