Correlation Between Fox Factory and Lear

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

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

Diversification Opportunities for Fox Factory and Lear

0.89

Correlation Coefficient

Fox Factory  Lear

Very poor diversification

The 3 months correlation between Fox and Lear is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and Fox Factory 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 Fox Factory Holding are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Fox Factory i.e., Fox Factory and Lear go up and down completely randomly.

Pair Corralation between Fox Factory and Lear

Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Lear. In addition to that, Fox Factory is 1.56 times more volatile than Lear Corporation. It trades about -0.08 of its total potential returns per unit of risk. Lear Corporation is currently generating about -0.05 per unit of volatility. If you would invest  9,529  in Lear Corporation on January 28, 2025 and sell it today you would lose (1,079) from holding Lear Corporation or give up 11.32% of portfolio value over 90 days.

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

Fox Factory Holding  vs.  Lear Corp.

Fox Factory Holding

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fox Factory and Lear

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

The idea behind Fox Factory Holding and Lear Corporation 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.