Correlation Between Flex and Where Food

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

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

Diversification Opportunities for Flex and Where Food

0.67

Correlation Coefficient

Flex  Where Food

Poor diversification

The 3 months correlation between Flex and Where is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes and Flex 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 Flex are associated (or correlated) with Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of Flex i.e., Flex and Where Food go up and down completely randomly.

Pair Corralation between Flex and Where Food

Given the investment horizon of 90 days Flex is expected to generate 1.74 times more return on investment than Where Food. However, Flex is 1.74 times more volatile than Where Food Comes. It trades about 0.08 of its potential returns per unit of risk. Where Food Comes is currently generating about 0.0 per unit of risk. If you would invest  1,053  in Flex on September 3, 2024 and sell it today you would earn a total of  2,844  from holding Flex or generate 270.09% return on investment over 90 days.

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

Flex  vs.  Where Food Comes

Flex

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Where Food Comes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Where Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flex and Where Food

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

The idea behind Flex and Where Food Comes 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.