Correlation Between Malibu Boats and Evil Empire

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

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

Diversification Opportunities for Malibu Boats and Evil Empire

0.0

Correlation Coefficient

Malibu Boats  Evil Empire

Pay attention - limited upside

The 3 months correlation between Malibu and Evil is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Evil Empire Designs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evil Empire Designs 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 Evil Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evil Empire Designs has no effect on the direction of Malibu Boats i.e., Malibu Boats and Evil Empire go up and down completely randomly.

Pair Corralation between Malibu Boats and Evil Empire

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the Evil Empire. But the stock apears to be less risky and, when comparing its historical volatility, Malibu Boats is 22.72 times less risky than Evil Empire. The stock trades about -0.02 of its potential returns per unit of risk. The Evil Empire Designs is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Evil Empire Designs on September 17, 2024 and sell it today you would lose (15.95) from holding Evil Empire Designs or give up 99.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Malibu Boats  vs.  Evil Empire Designs

Malibu Boats

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Malibu Boats are ranked lower than 4 (%) 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.

Evil Empire Designs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evil Empire Designs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Evil Empire is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Malibu Boats and Evil Empire

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

The idea behind Malibu Boats and Evil Empire Designs 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.