Correlation Between BranchOut Food and Coffee Holding

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

By analyzing existing cross correlation between BranchOut Food Common and Coffee Holding Co, you can compare the effects of market volatilities on BranchOut Food and Coffee Holding 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 BranchOut Food with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BranchOut Food and Coffee Holding.

Diversification Opportunities for BranchOut Food and Coffee Holding

-0.41

Correlation Coefficient

BranchOut Food  Coffee Holding

Very good diversification

The 3 months correlation between BranchOut and Coffee is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and BranchOut Food 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 BranchOut Food Common are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of BranchOut Food i.e., BranchOut Food and Coffee Holding go up and down completely randomly.

Pair Corralation between BranchOut Food and Coffee Holding

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 2.71 times more return on investment than Coffee Holding. However, BranchOut Food is 2.71 times more volatile than Coffee Holding Co. It trades about 0.02 of its potential returns per unit of risk. Coffee Holding Co is currently generating about 0.04 per unit of risk. If you would invest  600.00  in BranchOut Food Common on August 30, 2024 and sell it today you would lose (429.00) from holding BranchOut Food Common or give up 71.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.14%
Values	Daily Returns

BranchOut Food Common  vs.  Coffee Holding Co

BranchOut Food Common

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BranchOut Food Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BranchOut Food reported solid returns over the last few months and may actually be approaching a breakup point.

Coffee Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coffee Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BranchOut Food and Coffee Holding

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

The idea behind BranchOut Food Common and Coffee Holding Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.