Correlation Between Bon Natural and Freshpet
Can any of the company-specific risk be diversified away by investing in both Bon Natural and Freshpet 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 Bon Natural and Freshpet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bon Natural Life and Freshpet, you can compare the effects of market volatilities on Bon Natural and Freshpet 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 Bon Natural with a short position of Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Freshpet.
Diversification Opportunities for Bon Natural and Freshpet
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bon and Freshpet is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet and Bon Natural 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 Bon Natural Life are associated (or correlated) with Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Bon Natural i.e., Bon Natural and Freshpet go up and down completely randomly.
Pair Corralation between Bon Natural and Freshpet
Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Freshpet. In addition to that, Bon Natural is 2.36 times more volatile than Freshpet. It trades about -0.04 of its total potential returns per unit of risk. Freshpet is currently generating about 0.09 per unit of volatility. If you would invest 6,082 in Freshpet on August 24, 2024 and sell it today you would earn a total of 9,575 from holding Freshpet or generate 157.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bon Natural Life vs. Freshpet
Performance |
| Timeline |
| Bon Natural Life |
| Freshpet |
Bon Natural and Freshpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bon Natural and Freshpet
The main advantage of trading using opposite Bon Natural and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet's long position.| Bon Natural vs. Blue Star Foods | Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural vs. Central Garden Pet |
| Freshpet vs. Better Choice | Freshpet vs. BioAdaptives | Freshpet vs. Beyond Oil | Freshpet vs. Bon Natural Life |
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.
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