Correlation Between Farmmi and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both Farmmi and Beyond Meat 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 Farmmi and Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Beyond Meat, you can compare the effects of market volatilities on Farmmi and Beyond Meat 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 Farmmi with a short position of Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Beyond Meat.
Diversification Opportunities for Farmmi and Beyond Meat
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Farmmi and Beyond is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and Farmmi 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 Farmmi Inc are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Farmmi i.e., Farmmi and Beyond Meat go up and down completely randomly.
Pair Corralation between Farmmi and Beyond Meat
Given the investment horizon of 90 days Farmmi Inc is expected to generate 2.16 times more return on investment than Beyond Meat. However, Farmmi is 2.16 times more volatile than Beyond Meat. It trades about 0.12 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.06 per unit of risk. If you would invest 20.00 in Farmmi Inc on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Farmmi Inc or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmmi Inc vs. Beyond Meat
Performance |
| Timeline |
| Farmmi Inc |
| Beyond Meat |
Farmmi and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Beyond Meat
The main advantage of trading using opposite Farmmi and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.The idea behind Farmmi Inc and Beyond Meat 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.| Beyond Meat vs. Kraft Heinz Co | Beyond Meat vs. Hormel Foods | Beyond Meat vs. Kellanova | Beyond Meat vs. General Mills |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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