Correlation Between BANDAI NAMCO and Funko

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

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

Diversification Opportunities for BANDAI NAMCO and Funko

-0.54

Correlation Coefficient

BANDAI NAMCO  Funko

Excellent diversification

The 3 months correlation between BANDAI and Funko is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BANDAI NAMCO Holdings and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 BANDAI NAMCO i.e., BANDAI NAMCO and Funko go up and down completely randomly.

Pair Corralation between BANDAI NAMCO and Funko

Assuming the 90 days horizon BANDAI NAMCO Holdings is expected to generate 0.79 times more return on investment than Funko. However, BANDAI NAMCO Holdings is 1.26 times less risky than Funko. It trades about 0.21 of its potential returns per unit of risk. Funko Inc is currently generating about -0.23 per unit of risk. If you would invest  1,229  in BANDAI NAMCO Holdings on December 20, 2024 and sell it today you would earn a total of  485.00  from holding BANDAI NAMCO Holdings or generate 39.46% return on investment over 90 days.

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

BANDAI NAMCO Holdings  vs.  Funko Inc

BANDAI NAMCO Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BANDAI NAMCO Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, BANDAI NAMCO showed solid returns over the last few months and may actually be approaching a breakup point.

Funko Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Funko Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BANDAI NAMCO and Funko

The main advantage of trading using opposite BANDAI NAMCO and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.