Correlation Between Bagger Daves and HelloFresh

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

By analyzing existing cross correlation between Bagger Daves Burger and HelloFresh SE, you can compare the effects of market volatilities on Bagger Daves and HelloFresh 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 Bagger Daves with a short position of HelloFresh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and HelloFresh.

Diversification Opportunities for Bagger Daves and HelloFresh

0.22

Correlation Coefficient

Bagger Daves  HelloFresh

Modest diversification

The 3 months correlation between Bagger and HelloFresh is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and HelloFresh SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HelloFresh SE and Bagger Daves 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 Bagger Daves Burger are associated (or correlated) with HelloFresh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HelloFresh SE has no effect on the direction of Bagger Daves i.e., Bagger Daves and HelloFresh go up and down completely randomly.

Pair Corralation between Bagger Daves and HelloFresh

Given the investment horizon of 90 days Bagger Daves is expected to generate 1.15 times less return on investment than HelloFresh. In addition to that, Bagger Daves is 1.02 times more volatile than HelloFresh SE. It trades about 0.11 of its total potential returns per unit of risk. HelloFresh SE is currently generating about 0.13 per unit of volatility. If you would invest  798.00  in HelloFresh SE on September 1, 2024 and sell it today you would earn a total of  402.00  from holding HelloFresh SE or generate 50.38% return on investment over 90 days.

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

Bagger Daves Burger  vs.  HelloFresh SE

Bagger Daves Burger

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bagger Daves Burger are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Bagger Daves sustained solid returns over the last few months and may actually be approaching a breakup point.

HelloFresh SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bagger Daves and HelloFresh

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

The idea behind Bagger Daves Burger and HelloFresh SE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.