Correlation Between Figaro Coffee and Bloomberry Resorts

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

By analyzing existing cross correlation between Figaro Coffee Group and Bloomberry Resorts Corp, you can compare the effects of market volatilities on Figaro Coffee and Bloomberry Resorts 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 Figaro Coffee with a short position of Bloomberry Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Bloomberry Resorts.

Diversification Opportunities for Figaro Coffee and Bloomberry Resorts

-0.1

Correlation Coefficient

Figaro Coffee  Bloomberry Resorts

Good diversification

The 3 months correlation between Figaro and Bloomberry is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Bloomberry Resorts Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomberry Resorts Corp and Figaro Coffee 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 Figaro Coffee Group are associated (or correlated) with Bloomberry Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomberry Resorts Corp has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Bloomberry Resorts go up and down completely randomly.

Pair Corralation between Figaro Coffee and Bloomberry Resorts

Assuming the 90 days trading horizon Figaro Coffee Group is expected to generate 0.97 times more return on investment than Bloomberry Resorts. However, Figaro Coffee Group is 1.03 times less risky than Bloomberry Resorts. It trades about 0.08 of its potential returns per unit of risk. Bloomberry Resorts Corp is currently generating about -0.38 per unit of risk. If you would invest  78.00  in Figaro Coffee Group on September 24, 2024 and sell it today you would earn a total of  8.00  from holding Figaro Coffee Group or generate 10.26% return on investment over 90 days.

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

Figaro Coffee Group  vs.  Bloomberry Resorts Corp

Figaro Coffee Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Figaro Coffee Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Figaro Coffee may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bloomberry Resorts Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomberry Resorts Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Figaro Coffee and Bloomberry Resorts

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

The idea behind Figaro Coffee Group and Bloomberry Resorts Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.