Correlation Between American Outdoor and Malibu Boats

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

By analyzing existing cross correlation between American Outdoor Brands and Malibu Boats, you can compare the effects of market volatilities on American Outdoor and Malibu Boats 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 American Outdoor with a short position of Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Outdoor and Malibu Boats.

Diversification Opportunities for American Outdoor and Malibu Boats

-0.63

Correlation Coefficient

American Outdoor  Malibu Boats

Excellent diversification

The 3 months correlation between American and Malibu is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Outdoor Brands and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats and American Outdoor 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 American Outdoor Brands are associated (or correlated) with Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of American Outdoor i.e., American Outdoor and Malibu Boats go up and down completely randomly.

Pair Corralation between American Outdoor and Malibu Boats

Given the investment horizon of 90 days American Outdoor Brands is expected to under-perform the Malibu Boats. In addition to that, American Outdoor is 1.08 times more volatile than Malibu Boats. It trades about -0.09 of its total potential returns per unit of risk. Malibu Boats is currently generating about 0.07 per unit of volatility. If you would invest  2,976  in Malibu Boats on May 7, 2025 and sell it today you would earn a total of  351.00  from holding Malibu Boats or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

American Outdoor Brands  vs.  Malibu Boats

American Outdoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Malibu Boats

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Malibu Boats are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Malibu Boats unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Outdoor and Malibu Boats

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

The idea behind American Outdoor Brands and Malibu Boats 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.