Correlation Between MEDIFAST INC and Olaplex Holdings
Can any of the company-specific risk be diversified away by investing in both MEDIFAST INC and Olaplex Holdings 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 MEDIFAST INC and Olaplex Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDIFAST INC and Olaplex Holdings, you can compare the effects of market volatilities on MEDIFAST INC and Olaplex Holdings 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 MEDIFAST INC with a short position of Olaplex Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIFAST INC and Olaplex Holdings.
Diversification Opportunities for MEDIFAST INC and Olaplex Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MEDIFAST and Olaplex is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MEDIFAST INC and Olaplex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olaplex Holdings and MEDIFAST INC 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 MEDIFAST INC are associated (or correlated) with Olaplex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olaplex Holdings has no effect on the direction of MEDIFAST INC i.e., MEDIFAST INC and Olaplex Holdings go up and down completely randomly.
Pair Corralation between MEDIFAST INC and Olaplex Holdings
Considering the 90-day investment horizon MEDIFAST INC is expected to generate 0.62 times more return on investment than Olaplex Holdings. However, MEDIFAST INC is 1.61 times less risky than Olaplex Holdings. It trades about -0.02 of its potential returns per unit of risk. Olaplex Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,564 in MEDIFAST INC on November 9, 2024 and sell it today you would lose (15.00) from holding MEDIFAST INC or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDIFAST INC vs. Olaplex Holdings
Performance |
| Timeline |
| MEDIFAST INC |
| Olaplex Holdings |
MEDIFAST INC and Olaplex Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDIFAST INC and Olaplex Holdings
The main advantage of trading using opposite MEDIFAST INC and Olaplex Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIFAST INC position performs unexpectedly, Olaplex Holdings 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 Olaplex Holdings will offset losses from the drop in Olaplex Holdings' long position.| MEDIFAST INC vs. Rollins | MEDIFAST INC vs. Carriage Services | MEDIFAST INC vs. Service International | MEDIFAST INC vs. Bright Horizons Family |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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