Correlation Between ASSOC BR and Trupanion

Can any of the company-specific risk be diversified away by investing in both ASSOC BR and Trupanion 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 ASSOC BR and Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASSOC BR FOODS and Trupanion, you can compare the effects of market volatilities on ASSOC BR and Trupanion 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 ASSOC BR with a short position of Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and Trupanion.

Diversification Opportunities for ASSOC BR and Trupanion

-0.22

Correlation Coefficient

ASSOC BR  Trupanion

Very good diversification

The 3 months correlation between ASSOC and Trupanion is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion and ASSOC BR 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 ASSOC BR FOODS are associated (or correlated) with Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of ASSOC BR i.e., ASSOC BR and Trupanion go up and down completely randomly.

Pair Corralation between ASSOC BR and Trupanion

Assuming the 90 days trading horizon ASSOC BR FOODS is expected to generate 0.54 times more return on investment than Trupanion. However, ASSOC BR FOODS is 1.85 times less risky than Trupanion. It trades about 0.07 of its potential returns per unit of risk. Trupanion is currently generating about 0.02 per unit of risk. If you would invest  2,508  in ASSOC BR FOODS on September 18, 2024 and sell it today you would earn a total of  52.00  from holding ASSOC BR FOODS or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

ASSOC BR FOODS  vs.  Trupanion

ASSOC BR FOODS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASSOC BR FOODS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ASSOC BR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Trupanion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Trupanion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASSOC BR and Trupanion

The main advantage of trading using opposite ASSOC BR and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion's long position.

The idea behind ASSOC BR FOODS and Trupanion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.