Correlation Between Primo Brands and Funko

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

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

Diversification Opportunities for Primo Brands and Funko

-0.28

Correlation Coefficient

Primo Brands  Funko

Very good diversification

The 3 months correlation between Primo and Funko is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and Funko go up and down completely randomly.

Pair Corralation between Primo Brands and Funko

Given the investment horizon of 90 days Primo Brands is expected to generate 1.85 times less return on investment than Funko. But when comparing it to its historical volatility, Primo Brands is 1.23 times less risky than Funko. It trades about 0.22 of its potential returns per unit of risk. Funko Inc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,033  in Funko Inc on September 21, 2024 and sell it today you would earn a total of  202.00  from holding Funko Inc or generate 19.55% return on investment over 90 days.

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

Primo Brands  vs.  Funko Inc

Primo Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Funko Inc

Risk-Adjusted Performance

2 of 100

Very 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 Primo Brands and Funko

The main advantage of trading using opposite Primo Brands and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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 Primo Brands 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.