Correlation Between Latham and Foxx Development

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

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

Diversification Opportunities for Latham and Foxx Development

-0.08

Correlation Coefficient

Latham  Foxx Development

Good diversification

The 3 months correlation between Latham and Foxx is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Latham Group and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings and Latham 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 Latham Group are associated (or correlated) with Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Latham i.e., Latham and Foxx Development go up and down completely randomly.

Pair Corralation between Latham and Foxx Development

Given the investment horizon of 90 days Latham Group is expected to under-perform the Foxx Development. But the stock apears to be less risky and, when comparing its historical volatility, Latham Group is 2.63 times less risky than Foxx Development. The stock trades about -0.22 of its potential returns per unit of risk. The Foxx Development Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  549.00  in Foxx Development Holdings on October 11, 2024 and sell it today you would lose (46.00) from holding Foxx Development Holdings or give up 8.38% of portfolio value over 90 days.

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

Latham Group  vs.  Foxx Development Holdings

Latham Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Latham and Foxx Development

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

The idea behind Latham Group and Foxx Development 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.