Correlation Between Funko and United Parks

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

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

Diversification Opportunities for Funko and United Parks

-0.7

Correlation Coefficient

Funko  United Parks

Excellent diversification

The 3 months correlation between Funko and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and Funko 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 Funko Inc are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Funko i.e., Funko and United Parks go up and down completely randomly.

Pair Corralation between Funko and United Parks

Given the investment horizon of 90 days Funko Inc is expected to under-perform the United Parks. In addition to that, Funko is 1.82 times more volatile than United Parks Resorts. It trades about -0.03 of its total potential returns per unit of risk. United Parks Resorts is currently generating about -0.02 per unit of volatility. If you would invest  5,966  in United Parks Resorts on February 3, 2024 and sell it today you would lose (918.00) from holding United Parks Resorts or give up 15.39% of portfolio value over 90 days.

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

Funko Inc  vs.  United Parks Resorts

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 unsteady 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.

United Parks Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, United Parks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Funko and United Parks

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

The idea behind Funko Inc and United Parks Resorts 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.