Correlation Between LifeMD Preferred and FAT Brands
Can any of the company-specific risk be diversified away by investing in both LifeMD Preferred and FAT Brands 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 LifeMD Preferred and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LifeMD Preferred Series and FAT Brands, you can compare the effects of market volatilities on LifeMD Preferred and FAT Brands 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 LifeMD Preferred with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifeMD Preferred and FAT Brands.
Diversification Opportunities for LifeMD Preferred and FAT Brands
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LifeMD and FAT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LifeMD Preferred Series and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and LifeMD Preferred 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 LifeMD Preferred Series are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of LifeMD Preferred i.e., LifeMD Preferred and FAT Brands go up and down completely randomly.
Pair Corralation between LifeMD Preferred and FAT Brands
Assuming the 90 days horizon LifeMD Preferred Series is expected to generate 1.25 times more return on investment than FAT Brands. However, LifeMD Preferred is 1.25 times more volatile than FAT Brands. It trades about 0.06 of its potential returns per unit of risk. FAT Brands is currently generating about 0.01 per unit of risk. If you would invest 2,167 in LifeMD Preferred Series on August 31, 2024 and sell it today you would earn a total of 103.00 from holding LifeMD Preferred Series or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LifeMD Preferred Series vs. FAT Brands
Performance |
| Timeline |
| LifeMD Preferred Series |
| FAT Brands |
LifeMD Preferred and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LifeMD Preferred and FAT Brands
The main advantage of trading using opposite LifeMD Preferred and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeMD Preferred position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| LifeMD Preferred vs. Cadiz Depositary Shares | LifeMD Preferred vs. Star Equity Holdings | LifeMD Preferred vs. FAT Brands | LifeMD Preferred vs. Fortress Biotech Pref |
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 CEOs Directory module to screen CEOs from public companies around the world.
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