Correlation Between Malibu Boats and MCBC Holdings

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

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

Diversification Opportunities for Malibu Boats and MCBC Holdings

0.81

Correlation Coefficient

Malibu Boats  MCBC Holdings

Very poor diversification

The 3 months correlation between Malibu and MCBC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Malibu Boats i.e., Malibu Boats and MCBC Holdings go up and down completely randomly.

Pair Corralation between Malibu Boats and MCBC Holdings

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the MCBC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Malibu Boats is 1.17 times less risky than MCBC Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The MCBC Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,896  in MCBC Holdings on December 28, 2024 and sell it today you would lose (130.00) from holding MCBC Holdings or give up 6.86% of portfolio value over 90 days.

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

Malibu Boats  vs.  MCBC Holdings

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.

MCBC Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days MCBC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Malibu Boats and MCBC Holdings

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

The idea behind Malibu Boats and MCBC Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.