Correlation Between HR Block and MEDIFAST INC
Can any of the company-specific risk be diversified away by investing in both HR Block and MEDIFAST INC 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 HR Block and MEDIFAST INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HR Block and MEDIFAST INC, you can compare the effects of market volatilities on HR Block and MEDIFAST INC 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 HR Block with a short position of MEDIFAST INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Block and MEDIFAST INC.
Diversification Opportunities for HR Block and MEDIFAST INC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HRB and MEDIFAST is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HR Block and MEDIFAST INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIFAST INC and HR Block 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 HR Block are associated (or correlated) with MEDIFAST INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIFAST INC has no effect on the direction of HR Block i.e., HR Block and MEDIFAST INC go up and down completely randomly.
Pair Corralation between HR Block and MEDIFAST INC
Considering the 90-day investment horizon HR Block is expected to generate 0.58 times more return on investment than MEDIFAST INC. However, HR Block is 1.74 times less risky than MEDIFAST INC. It trades about 0.06 of its potential returns per unit of risk. MEDIFAST INC is currently generating about -0.11 per unit of risk. If you would invest 3,473 in HR Block on November 19, 2024 and sell it today you would earn a total of 1,787 from holding HR Block or generate 51.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HR Block vs. MEDIFAST INC
Performance |
| Timeline |
| HR Block |
| MEDIFAST INC |
HR Block and MEDIFAST INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HR Block and MEDIFAST INC
The main advantage of trading using opposite HR Block and MEDIFAST INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Block position performs unexpectedly, MEDIFAST INC 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 MEDIFAST INC will offset losses from the drop in MEDIFAST INC's long position.| HR Block vs. Bright Horizons Family | HR Block vs. Service International | HR Block vs. Carriage Services | HR Block vs. Mister Car Wash, |
| MEDIFAST INC vs. Rollins | MEDIFAST INC vs. Carriage Services | MEDIFAST INC vs. Service International | MEDIFAST INC vs. Bright Horizons Family |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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