Correlation Between Fresh Del and Better Choice

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

By analyzing existing cross correlation between Fresh Del Monte and Better Choice, you can compare the effects of market volatilities on Fresh Del and Better Choice 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 Fresh Del with a short position of Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Del and Better Choice.

Diversification Opportunities for Fresh Del and Better Choice

0.06

Correlation Coefficient

Fresh Del  Better Choice

Significant diversification

The 3 months correlation between Fresh and Better is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Del Monte and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Fresh Del 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 Fresh Del Monte are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Fresh Del i.e., Fresh Del and Better Choice go up and down completely randomly.

Pair Corralation between Fresh Del and Better Choice

Considering the 90-day investment horizon Fresh Del Monte is expected to generate 0.29 times more return on investment than Better Choice. However, Fresh Del Monte is 3.46 times less risky than Better Choice. It trades about 0.14 of its potential returns per unit of risk. Better Choice is currently generating about -0.02 per unit of risk. If you would invest  2,933  in Fresh Del Monte on September 18, 2024 and sell it today you would earn a total of  457.00  from holding Fresh Del Monte or generate 15.58% return on investment over 90 days.

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

Fresh Del Monte  vs.  Better Choice

Fresh Del Monte

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

Better Choice

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Better Choice has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Fresh Del and Better Choice

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

The idea behind Fresh Del Monte and Better Choice 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.