Correlation Between MEDIFAST INC and Rollins
Can any of the company-specific risk be diversified away by investing in both MEDIFAST INC and Rollins 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 Rollins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDIFAST INC and Rollins, you can compare the effects of market volatilities on MEDIFAST INC and Rollins 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 Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIFAST INC and Rollins.
Diversification Opportunities for MEDIFAST INC and Rollins
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MEDIFAST and Rollins is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MEDIFAST INC and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins 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 Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of MEDIFAST INC i.e., MEDIFAST INC and Rollins go up and down completely randomly.
Pair Corralation between MEDIFAST INC and Rollins
Considering the 90-day investment horizon MEDIFAST INC is expected to generate 1.77 times more return on investment than Rollins. However, MEDIFAST INC is 1.77 times more volatile than Rollins. It trades about 0.07 of its potential returns per unit of risk. Rollins is currently generating about 0.01 per unit of risk. If you would invest 1,758 in MEDIFAST INC on August 24, 2024 and sell it today you would earn a total of 72.00 from holding MEDIFAST INC or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDIFAST INC vs. Rollins
Performance |
| Timeline |
| MEDIFAST INC |
| Rollins |
MEDIFAST INC and Rollins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDIFAST INC and Rollins
The main advantage of trading using opposite MEDIFAST INC and Rollins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIFAST INC position performs unexpectedly, Rollins 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 Rollins will offset losses from the drop in Rollins' long position.| MEDIFAST INC vs. Rollins | MEDIFAST INC vs. Carriage Services | MEDIFAST INC vs. Service International | MEDIFAST INC vs. Bright Horizons Family |
| Rollins vs. Carriage Services | Rollins vs. Frontdoor | Rollins vs. Mister Car Wash | Rollins 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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