Correlation Between Real Good and Freshpet
Can any of the company-specific risk be diversified away by investing in both Real Good and Freshpet 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 Real Good and Freshpet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Good Food and Freshpet, you can compare the effects of market volatilities on Real Good and Freshpet 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 Real Good with a short position of Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Good and Freshpet.
Diversification Opportunities for Real Good and Freshpet
Excellent diversification
The 3 months correlation between Real and Freshpet is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet and Real Good 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 Real Good Food are associated (or correlated) with Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Real Good i.e., Real Good and Freshpet go up and down completely randomly.
Pair Corralation between Real Good and Freshpet
Considering the 90-day investment horizon Real Good Food is expected to under-perform the Freshpet. In addition to that, Real Good is 1.47 times more volatile than Freshpet. It trades about -0.33 of its total potential returns per unit of risk. Freshpet is currently generating about 0.25 per unit of volatility. If you would invest 13,326 in Freshpet on August 24, 2024 and sell it today you would earn a total of 2,356 from holding Freshpet or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Good Food vs. Freshpet
Performance |
| Timeline |
| Real Good Food |
| Freshpet |
Real Good and Freshpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Good and Freshpet
The main advantage of trading using opposite Real Good and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Good position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet's long position.| Real Good vs. Seneca Foods Corp | Real Good vs. Central Garden Pet | Real Good vs. Central Garden Pet | Real Good vs. Natures Sunshine Products |
| Freshpet vs. Bellring Brands LLC | Freshpet vs. Treehouse Foods | Freshpet vs. Ingredion Incorporated | Freshpet vs. JM Smucker |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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