Correlation Between Eat Well and 1812 Brewing
Can any of the company-specific risk be diversified away by investing in both Eat Well and 1812 Brewing 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 Eat Well and 1812 Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eat Well Investment and 1812 Brewing, you can compare the effects of market volatilities on Eat Well and 1812 Brewing 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 Eat Well with a short position of 1812 Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eat Well and 1812 Brewing.
Diversification Opportunities for Eat Well and 1812 Brewing
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eat and 1812 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eat Well Investment and 1812 Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1812 Brewing and Eat Well 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 Eat Well Investment are associated (or correlated) with 1812 Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1812 Brewing has no effect on the direction of Eat Well i.e., Eat Well and 1812 Brewing go up and down completely randomly.
Pair Corralation between Eat Well and 1812 Brewing
Assuming the 90 days horizon Eat Well is expected to generate 3.18 times less return on investment than 1812 Brewing. But when comparing it to its historical volatility, Eat Well Investment is 2.47 times less risky than 1812 Brewing. It trades about 0.22 of its potential returns per unit of risk. 1812 Brewing is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 0.01 in 1812 Brewing on September 24, 2024 and sell it today you would earn a total of 0.00 from holding 1812 Brewing or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eat Well Investment vs. 1812 Brewing
Performance |
| Timeline |
| Eat Well Investment |
| 1812 Brewing |
Eat Well and 1812 Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eat Well and 1812 Brewing
The main advantage of trading using opposite Eat Well and 1812 Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eat Well position performs unexpectedly, 1812 Brewing 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 1812 Brewing will offset losses from the drop in 1812 Brewing's long position.| Eat Well vs. Flow Capital Corp | Eat Well vs. Guardian Capital Group | Eat Well vs. Urbana | Eat Well vs. Princeton Capital |
| 1812 Brewing vs. Carlyle Secured Lending | 1812 Brewing vs. Sixth Street Specialty | 1812 Brewing vs. Hercules Capital | 1812 Brewing vs. BlackRock TCP Capital |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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