Correlation Between Farmmi and Stryve Foods
Can any of the company-specific risk be diversified away by investing in both Farmmi and Stryve Foods 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 Stryve Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Stryve Foods, you can compare the effects of market volatilities on Farmmi and Stryve Foods 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 Stryve Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Stryve Foods.
Diversification Opportunities for Farmmi and Stryve Foods
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmmi and Stryve is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Stryve Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryve Foods 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 Stryve Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryve Foods has no effect on the direction of Farmmi i.e., Farmmi and Stryve Foods go up and down completely randomly.
Pair Corralation between Farmmi and Stryve Foods
Given the investment horizon of 90 days Farmmi Inc is expected to under-perform the Stryve Foods. In addition to that, Farmmi is 1.2 times more volatile than Stryve Foods. It trades about -0.05 of its total potential returns per unit of risk. Stryve Foods is currently generating about 0.0 per unit of volatility. If you would invest 127.00 in Stryve Foods on September 1, 2024 and sell it today you would lose (34.00) from holding Stryve Foods or give up 26.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmmi Inc vs. Stryve Foods
Performance |
| Timeline |
| Farmmi Inc |
| Stryve Foods |
Farmmi and Stryve Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Stryve Foods
The main advantage of trading using opposite Farmmi and Stryve Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Stryve Foods 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 Stryve Foods will offset losses from the drop in Stryve Foods' long position.The idea behind Farmmi Inc and Stryve Foods 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.| Stryve Foods vs. Campbell Soup | Stryve Foods vs. ConAgra Foods | Stryve Foods vs. Hormel Foods | Stryve Foods vs. Kellanova |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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