Correlation Between Malibu Boats and Installed Building

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

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

Diversification Opportunities for Malibu Boats and Installed Building

0.59

Correlation Coefficient

Malibu Boats  Installed Building

Very weak diversification

The 3 months correlation between Malibu and Installed is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and Installed Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Installed Building 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 Installed Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Installed Building has no effect on the direction of Malibu Boats i.e., Malibu Boats and Installed Building go up and down completely randomly.

Pair Corralation between Malibu Boats and Installed Building

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the Installed Building. In addition to that, Malibu Boats is 1.05 times more volatile than Installed Building Products. It trades about -0.13 of its total potential returns per unit of risk. Installed Building Products is currently generating about 0.01 per unit of volatility. If you would invest  17,234  in Installed Building Products on December 29, 2024 and sell it today you would lose (5.00) from holding Installed Building Products or give up 0.03% of portfolio value over 90 days.

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

Malibu Boats  vs.  Installed Building Products

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.

Installed Building

Risk-Adjusted Performance

Very Weak

Over the last 90 days Installed Building Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Installed Building is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Malibu Boats and Installed Building

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

The idea behind Malibu Boats and Installed Building Products 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..