Correlation Between Genuine Parts and Funko

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

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

Diversification Opportunities for Genuine Parts and Funko

-0.6

Correlation Coefficient

Genuine Parts  Funko

Excellent diversification

The 3 months correlation between Genuine and Funko is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc and Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and Funko go up and down completely randomly.

Pair Corralation between Genuine Parts and Funko

Considering the 90-day investment horizon Genuine Parts is expected to generate 2.28 times less return on investment than Funko. In addition to that, Genuine Parts is 1.0 times more volatile than Funko Inc. It trades about 0.05 of its total potential returns per unit of risk. Funko Inc is currently generating about 0.11 per unit of volatility. If you would invest  607.00  in Funko Inc on February 3, 2024 and sell it today you would earn a total of  35.00  from holding Funko Inc or generate 5.77% return on investment over 90 days.

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

Genuine Parts Co  vs.  Funko Inc

Genuine Parts

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Genuine Parts exhibited solid returns over the last few months and may actually be approaching a breakup point.

Funko Inc

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Genuine Parts and Funko

The main advantage of trading using opposite Genuine Parts and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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 Genuine Parts Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.