Correlation Between Funko and Abercrombie Fitch

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

By analyzing existing cross correlation between Funko Inc and Abercrombie Fitch, you can compare the effects of market volatilities on Funko and Abercrombie Fitch 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 Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Abercrombie Fitch.

Diversification Opportunities for Funko and Abercrombie Fitch

-0.29

Correlation Coefficient

Funko  Abercrombie Fitch

Very good diversification

The 3 months correlation between Funko and Abercrombie is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch 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 Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Funko i.e., Funko and Abercrombie Fitch go up and down completely randomly.

Pair Corralation between Funko and Abercrombie Fitch

Given the investment horizon of 90 days Funko Inc is expected to generate 0.71 times more return on investment than Abercrombie Fitch. However, Funko Inc is 1.41 times less risky than Abercrombie Fitch. It trades about 0.0 of its potential returns per unit of risk. Abercrombie Fitch is currently generating about -0.02 per unit of risk. If you would invest  624.00  in Funko Inc on January 28, 2024 and sell it today you would lose (4.00) from holding Funko Inc or give up 0.64% of portfolio value over 90 days.

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

Funko Inc  vs.  Abercrombie Fitch

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 inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Abercrombie Fitch

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abercrombie Fitch are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Abercrombie Fitch reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Funko and Abercrombie Fitch

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

The idea behind Funko Inc and Abercrombie Fitch 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.