Correlation Between Smart For and Branded Legacy
Can any of the company-specific risk be diversified away by investing in both Smart For and Branded Legacy 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 Smart For and Branded Legacy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart for Life, and Branded Legacy, you can compare the effects of market volatilities on Smart For and Branded Legacy 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 Smart For with a short position of Branded Legacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart For and Branded Legacy.
Diversification Opportunities for Smart For and Branded Legacy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and Branded is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Branded Legacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Branded Legacy and Smart For 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 Smart for Life, are associated (or correlated) with Branded Legacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Branded Legacy has no effect on the direction of Smart For i.e., Smart For and Branded Legacy go up and down completely randomly.
Pair Corralation between Smart For and Branded Legacy
Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Branded Legacy. But the stock apears to be less risky and, when comparing its historical volatility, Smart for Life, is 1.13 times less risky than Branded Legacy. The stock trades about -0.2 of its potential returns per unit of risk. The Branded Legacy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Branded Legacy on September 2, 2024 and sell it today you would lose (0.10) from holding Branded Legacy or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.29% |
| Values | Daily Returns |
Smart for Life, vs. Branded Legacy
Performance |
| Timeline |
| Smart for Life, |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Branded Legacy |
Smart For and Branded Legacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart For and Branded Legacy
The main advantage of trading using opposite Smart For and Branded Legacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart For position performs unexpectedly, Branded Legacy 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 Branded Legacy will offset losses from the drop in Branded Legacy's long position.| Smart For vs. Bit Origin | Smart For vs. Better Choice | Smart For vs. Farmmi Inc | Smart For vs. Laird Superfood |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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