Correlation Between PetMed Express and High Tide
Can any of the company-specific risk be diversified away by investing in both PetMed Express and High Tide 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 PetMed Express and High Tide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetMed Express and High Tide, you can compare the effects of market volatilities on PetMed Express and High Tide 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 PetMed Express with a short position of High Tide. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetMed Express and High Tide.
Diversification Opportunities for PetMed Express and High Tide
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PetMed and High is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PetMed Express and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and PetMed Express 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 PetMed Express are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of PetMed Express i.e., PetMed Express and High Tide go up and down completely randomly.
Pair Corralation between PetMed Express and High Tide
Given the investment horizon of 90 days PetMed Express is expected to under-perform the High Tide. But the stock apears to be less risky and, when comparing its historical volatility, PetMed Express is 1.08 times less risky than High Tide. The stock trades about -0.06 of its potential returns per unit of risk. The High Tide is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 177.00 in High Tide on August 24, 2024 and sell it today you would earn a total of 90.00 from holding High Tide or generate 50.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetMed Express vs. High Tide
Performance |
| Timeline |
| PetMed Express |
| High Tide |
PetMed Express and High Tide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetMed Express and High Tide
The main advantage of trading using opposite PetMed Express and High Tide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetMed Express position performs unexpectedly, High Tide 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 High Tide will offset losses from the drop in High Tide's long position.| PetMed Express vs. High Tide | PetMed Express vs. China Jo Jo Drugstores | PetMed Express vs. Walgreens Boots Alliance | PetMed Express vs. 111 Inc |
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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