Correlation Between BranchOut Food and Westrock Coffee

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

By analyzing existing cross correlation between BranchOut Food Common and Westrock Coffee, you can compare the effects of market volatilities on BranchOut Food and Westrock Coffee 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 BranchOut Food with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of BranchOut Food and Westrock Coffee.

Diversification Opportunities for BranchOut Food and Westrock Coffee

0.31

Correlation Coefficient

BranchOut Food  Westrock Coffee

Weak diversification

The 3 months correlation between BranchOut and Westrock is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and BranchOut Food 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 BranchOut Food Common are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of BranchOut Food i.e., BranchOut Food and Westrock Coffee go up and down completely randomly.

Pair Corralation between BranchOut Food and Westrock Coffee

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 1.27 times more return on investment than Westrock Coffee. However, BranchOut Food is 1.27 times more volatile than Westrock Coffee. It trades about 0.13 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.08 per unit of risk. If you would invest  138.00  in BranchOut Food Common on October 6, 2024 and sell it today you would earn a total of  54.00  from holding BranchOut Food Common or generate 39.13% return on investment over 90 days.

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

BranchOut Food Common  vs.  Westrock Coffee

BranchOut Food Common

Risk-Adjusted Performance

10 of 100

OK

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

Westrock Coffee

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BranchOut Food and Westrock Coffee

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

The idea behind BranchOut Food Common and Westrock Coffee 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.