Correlation Between Silver Spike and PetIQ

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

By analyzing existing cross correlation between Silver Spike Investment and PetIQ Inc, you can compare the effects of market volatilities on Silver Spike and PetIQ 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 Silver Spike with a short position of PetIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spike and PetIQ.

Diversification Opportunities for Silver Spike and PetIQ

0.52

Correlation Coefficient

Silver Spike  PetIQ

Very weak diversification

The 3 months correlation between Silver and PetIQ is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spike Investment and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc and Silver Spike 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 Silver Spike Investment are associated (or correlated) with PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Silver Spike i.e., Silver Spike and PetIQ go up and down completely randomly.

Pair Corralation between Silver Spike and PetIQ

Given the investment horizon of 90 days Silver Spike Investment is expected to generate 15.55 times more return on investment than PetIQ. However, Silver Spike is 15.55 times more volatile than PetIQ Inc. It trades about 0.15 of its potential returns per unit of risk. PetIQ Inc is currently generating about 0.35 per unit of risk. If you would invest  1,122  in Silver Spike Investment on September 5, 2024 and sell it today you would earn a total of  158.00  from holding Silver Spike Investment or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	59.68%
Values	Daily Returns

Silver Spike Investment  vs.  PetIQ Inc

Silver Spike Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Spike Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

PetIQ Inc

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PetIQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Silver Spike and PetIQ

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

The idea behind Silver Spike Investment and PetIQ Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.