Correlation Between Branded Legacy and Calbee

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

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

Diversification Opportunities for Branded Legacy and Calbee

0.23

Correlation Coefficient

Branded Legacy  Calbee

Modest diversification

The 3 months correlation between Branded and Calbee is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Branded Legacy and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc and Branded Legacy 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 Branded Legacy are associated (or correlated) with Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Branded Legacy i.e., Branded Legacy and Calbee go up and down completely randomly.

Pair Corralation between Branded Legacy and Calbee

Given the investment horizon of 90 days Branded Legacy is expected to under-perform the Calbee. In addition to that, Branded Legacy is 9.97 times more volatile than Calbee Inc. It trades about -0.08 of its total potential returns per unit of risk. Calbee Inc is currently generating about -0.14 per unit of volatility. If you would invest  534.00  in Calbee Inc on October 5, 2024 and sell it today you would lose (26.00) from holding Calbee Inc or give up 4.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Branded Legacy  vs.  Calbee Inc

Branded Legacy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Branded Legacy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Branded Legacy and Calbee

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

The idea behind Branded Legacy and Calbee Inc 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.