Correlation Between FitLife Brands, and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both FitLife Brands, and FARO Technologies 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 FitLife Brands, and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FitLife Brands, Common and FARO Technologies, you can compare the effects of market volatilities on FitLife Brands, and FARO Technologies 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 FitLife Brands, with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FitLife Brands, and FARO Technologies.
Diversification Opportunities for FitLife Brands, and FARO Technologies
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between FitLife and FARO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and FitLife Brands, 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 FitLife Brands, Common are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of FitLife Brands, i.e., FitLife Brands, and FARO Technologies go up and down completely randomly.
Pair Corralation between FitLife Brands, and FARO Technologies
Given the investment horizon of 90 days FitLife Brands, Common is expected to generate 0.67 times more return on investment than FARO Technologies. However, FitLife Brands, Common is 1.48 times less risky than FARO Technologies. It trades about 0.07 of its potential returns per unit of risk. FARO Technologies is currently generating about 0.01 per unit of risk. If you would invest 1,685 in FitLife Brands, Common on September 2, 2024 and sell it today you would earn a total of 1,688 from holding FitLife Brands, Common or generate 100.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
FitLife Brands, Common vs. FARO Technologies
Performance |
| Timeline |
| FitLife Brands, Common |
| FARO Technologies |
FitLife Brands, and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FitLife Brands, and FARO Technologies
The main advantage of trading using opposite FitLife Brands, and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| FitLife Brands, vs. Seneca Foods Corp | FitLife Brands, vs. Central Garden Pet | FitLife Brands, vs. Central Garden Pet | FitLife Brands, vs. Lifeway Foods |
| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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