Correlation Between ALLSTATE and Funko

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

By analyzing existing cross correlation between ALLSTATE P 328 and Funko Inc, you can compare the effects of market volatilities on ALLSTATE 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 ALLSTATE with a short position of Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Funko.

Diversification Opportunities for ALLSTATE and Funko

-0.56

Correlation Coefficient

ALLSTATE  Funko

Excellent diversification

The 3 months correlation between ALLSTATE and Funko is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 328 and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and ALLSTATE 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 ALLSTATE P 328 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 ALLSTATE i.e., ALLSTATE and Funko go up and down completely randomly.

Pair Corralation between ALLSTATE and Funko

Assuming the 90 days trading horizon ALLSTATE P 328 is expected to under-perform the Funko. But the bond apears to be less risky and, when comparing its historical volatility, ALLSTATE P 328 is 8.5 times less risky than Funko. The bond trades about -0.14 of its potential returns per unit of risk. The Funko Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,221  in Funko Inc on October 20, 2024 and sell it today you would earn a total of  96.00  from holding Funko Inc or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.61%
Values	Daily Returns

ALLSTATE P 328  vs.  Funko Inc

ALLSTATE P 328

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 328 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Funko Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALLSTATE and Funko

The main advantage of trading using opposite ALLSTATE and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLSTATE 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 ALLSTATE P 328 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.