Correlation Between PHINIA and Fox Factory

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

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

Diversification Opportunities for PHINIA and Fox Factory

-0.79

Correlation Coefficient

PHINIA  Fox Factory

Pay attention - limited upside

The 3 months correlation between PHINIA and Fox is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PHINIA Inc and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and PHINIA 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 PHINIA Inc are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of PHINIA i.e., PHINIA and Fox Factory go up and down completely randomly.

Pair Corralation between PHINIA and Fox Factory

Given the investment horizon of 90 days PHINIA Inc is expected to generate 0.52 times more return on investment than Fox Factory. However, PHINIA Inc is 1.93 times less risky than Fox Factory. It trades about 0.25 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.09 per unit of risk. If you would invest  2,982  in PHINIA Inc on February 8, 2024 and sell it today you would earn a total of  1,272  from holding PHINIA Inc or generate 42.66% return on investment over 90 days.

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

PHINIA Inc  vs.  Fox Factory Holding

PHINIA Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, PHINIA displayed solid returns over the last few months and may actually be approaching a breakup point.

Fox Factory Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PHINIA and Fox Factory

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

The idea behind PHINIA Inc and Fox Factory Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.