Correlation Between Emerson Radio and Funko

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

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

Diversification Opportunities for Emerson Radio and Funko

0.26

Correlation Coefficient

Emerson Radio  Funko

Modest diversification

The 3 months correlation between Emerson and Funko is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Emerson Radio 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 Emerson Radio are associated (or correlated) with Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Emerson Radio i.e., Emerson Radio and Funko go up and down completely randomly.

Pair Corralation between Emerson Radio and Funko

Considering the 90-day investment horizon Emerson Radio is expected to generate 28.08 times less return on investment than Funko. But when comparing it to its historical volatility, Emerson Radio is 1.1 times less risky than Funko. It trades about 0.01 of its potential returns per unit of risk. Funko Inc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,061  in Funko Inc on September 23, 2024 and sell it today you would earn a total of  188.00  from holding Funko Inc or generate 17.72% return on investment over 90 days.

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

Emerson Radio  vs.  Funko Inc

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Emerson Radio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Funko Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Emerson Radio and Funko

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

The idea behind Emerson Radio and Funko Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.