Correlation Between BASE and Farmers Edge

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

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

Diversification Opportunities for BASE and Farmers Edge

0.0

Correlation Coefficient

BASE  Farmers Edge

Pay attention - limited upside

The 3 months correlation between BASE and Farmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Farmers Edge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Edge and BASE 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 BASE Inc are associated (or correlated) with Farmers Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Edge has no effect on the direction of BASE i.e., BASE and Farmers Edge go up and down completely randomly.

Pair Corralation between BASE and Farmers Edge

If you would invest  194.00  in BASE Inc on December 21, 2024 and sell it today you would earn a total of  60.00  from holding BASE Inc or generate 30.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BASE Inc  vs.  Farmers Edge

BASE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Farmers Edge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farmers Edge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Farmers Edge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BASE and Farmers Edge

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

The idea behind BASE Inc and Farmers Edge 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.