Correlation Between Mazda and Funko

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

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

Diversification Opportunities for Mazda and Funko

0.07

Correlation Coefficient

Mazda  Funko

Significant diversification

The 3 months correlation between Mazda and Funko is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Mazda 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 Mazda Motor 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 Mazda i.e., Mazda and Funko go up and down completely randomly.

Pair Corralation between Mazda and Funko

Assuming the 90 days horizon Mazda Motor is expected to generate 1.02 times more return on investment than Funko. However, Mazda is 1.02 times more volatile than Funko Inc. It trades about 0.06 of its potential returns per unit of risk. Funko Inc is currently generating about 0.04 per unit of risk. If you would invest  675.00  in Mazda Motor on October 26, 2024 and sell it today you would earn a total of  15.00  from holding Mazda Motor or generate 2.22% return on investment over 90 days.

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

Mazda Motor  vs.  Funko Inc

Mazda Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mazda Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mazda is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Funko Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mazda and Funko

The main advantage of trading using opposite Mazda and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda 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 Mazda Motor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.