Correlation Between FLOWERS and Heritage Distilling

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

By analyzing existing cross correlation between FLOWERS FOODS INC and Heritage Distilling Holding, you can compare the effects of market volatilities on FLOWERS and Heritage Distilling 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 FLOWERS with a short position of Heritage Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOWERS and Heritage Distilling.

Diversification Opportunities for FLOWERS and Heritage Distilling

0.09

Correlation Coefficient

FLOWERS  Heritage Distilling

Significant diversification

The 3 months correlation between FLOWERS and Heritage is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding FLOWERS FOODS INC and Heritage Distilling Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Distilling and FLOWERS 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 FLOWERS FOODS INC are associated (or correlated) with Heritage Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Distilling has no effect on the direction of FLOWERS i.e., FLOWERS and Heritage Distilling go up and down completely randomly.

Pair Corralation between FLOWERS and Heritage Distilling

Assuming the 90 days trading horizon FLOWERS FOODS INC is expected to generate 0.13 times more return on investment than Heritage Distilling. However, FLOWERS FOODS INC is 7.41 times less risky than Heritage Distilling. It trades about -0.15 of its potential returns per unit of risk. Heritage Distilling Holding is currently generating about -0.4 per unit of risk. If you would invest  9,833  in FLOWERS FOODS INC on September 17, 2024 and sell it today you would lose (459.00) from holding FLOWERS FOODS INC or give up 4.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	43.9%
Values	Daily Returns

FLOWERS FOODS INC  vs.  Heritage Distilling Holding

FLOWERS FOODS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLOWERS FOODS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FLOWERS FOODS INC investors.

Heritage Distilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Distilling Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with FLOWERS and Heritage Distilling

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

The idea behind FLOWERS FOODS INC and Heritage Distilling Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.