Correlation Between Malibu Boats and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both Malibu Boats and GameStop Corp 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 Malibu Boats and GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malibu Boats and GameStop Corp, you can compare the effects of market volatilities on Malibu Boats and GameStop Corp 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 Malibu Boats with a short position of GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malibu Boats and GameStop Corp.
Diversification Opportunities for Malibu Boats and GameStop Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malibu and GameStop is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Malibu Boats 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 Malibu Boats are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Malibu Boats i.e., Malibu Boats and GameStop Corp go up and down completely randomly.
Pair Corralation between Malibu Boats and GameStop Corp
Given the investment horizon of 90 days Malibu Boats is expected to generate 0.51 times more return on investment than GameStop Corp. However, Malibu Boats is 1.96 times less risky than GameStop Corp. It trades about -0.17 of its potential returns per unit of risk. GameStop Corp is currently generating about -0.21 per unit of risk. If you would invest 3,921 in Malibu Boats on January 18, 2024 and sell it today you would lose (432.00) from holding Malibu Boats or give up 11.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Malibu Boats vs. GameStop Corp
Performance |
Timeline |
Malibu Boats |
GameStop Corp |
Malibu Boats and GameStop Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Malibu Boats and GameStop Corp
The main advantage of trading using opposite Malibu Boats and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.Malibu Boats vs. LCI Industries | Malibu Boats vs. Winnebago Industries | Malibu Boats vs. Thor Industries | Malibu Boats vs. EZGO Technologies |
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Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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