Correlation Between Safety Shot and Primo Brands

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

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

Diversification Opportunities for Safety Shot and Primo Brands

-0.84

Correlation Coefficient

Safety Shot  Primo Brands

Pay attention - limited upside

The 3 months correlation between Safety and Primo is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands and Safety Shot 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 Safety Shot are associated (or correlated) with Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Safety Shot i.e., Safety Shot and Primo Brands go up and down completely randomly.

Pair Corralation between Safety Shot and Primo Brands

Given the investment horizon of 90 days Safety Shot is expected to under-perform the Primo Brands. In addition to that, Safety Shot is 2.21 times more volatile than Primo Brands. It trades about -0.15 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.18 per unit of volatility. If you would invest  2,453  in Primo Brands on September 22, 2024 and sell it today you would earn a total of  645.00  from holding Primo Brands or generate 26.29% return on investment over 90 days.

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

Safety Shot  vs.  Primo Brands

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Primo Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safety Shot and Primo Brands

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

The idea behind Safety Shot and Primo Brands 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..