Correlation Between Freshpet and Blue Star
Can any of the company-specific risk be diversified away by investing in both Freshpet and Blue Star 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 Freshpet and Blue Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Blue Star Foods, you can compare the effects of market volatilities on Freshpet and Blue Star 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 Freshpet with a short position of Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Blue Star.
Diversification Opportunities for Freshpet and Blue Star
Excellent diversification
The 3 months correlation between Freshpet and Blue is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Blue Star Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Foods and Freshpet 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 Freshpet are associated (or correlated) with Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Foods has no effect on the direction of Freshpet i.e., Freshpet and Blue Star go up and down completely randomly.
Pair Corralation between Freshpet and Blue Star
Given the investment horizon of 90 days Freshpet is expected to generate 0.5 times more return on investment than Blue Star. However, Freshpet is 2.02 times less risky than Blue Star. It trades about 0.23 of its potential returns per unit of risk. Blue Star Foods is currently generating about -0.35 per unit of risk. If you would invest 13,468 in Freshpet on August 28, 2024 and sell it today you would earn a total of 2,000 from holding Freshpet or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. Blue Star Foods
Performance |
| Timeline |
| Freshpet |
| Blue Star Foods |
Freshpet and Blue Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and Blue Star
The main advantage of trading using opposite Freshpet and Blue Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet position performs unexpectedly, Blue Star 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 Blue Star will offset losses from the drop in Blue Star's long position.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
| Blue Star vs. Better Choice | Blue Star vs. Stryve Foods | Blue Star vs. BioAdaptives | Blue Star vs. Beyond Oil |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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