Correlation Between Better Choice and Fresh Del

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

By analyzing existing cross correlation between Better Choice and Fresh Del Monte, you can compare the effects of market volatilities on Better Choice and Fresh Del 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 Better Choice with a short position of Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Choice and Fresh Del.

Diversification Opportunities for Better Choice and Fresh Del

0.06

Correlation Coefficient

Better Choice  Fresh Del

Significant diversification

The 3 months correlation between Better and Fresh is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Better Choice and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte and Better Choice 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 Better Choice are associated (or correlated) with Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Better Choice i.e., Better Choice and Fresh Del go up and down completely randomly.

Pair Corralation between Better Choice and Fresh Del

Given the investment horizon of 90 days Better Choice is expected to under-perform the Fresh Del. In addition to that, Better Choice is 5.2 times more volatile than Fresh Del Monte. It trades about -0.01 of its total potential returns per unit of risk. Fresh Del Monte is currently generating about 0.05 per unit of volatility. If you would invest  2,434  in Fresh Del Monte on September 18, 2024 and sell it today you would earn a total of  972.00  from holding Fresh Del Monte or generate 39.93% return on investment over 90 days.

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

Better Choice  vs.  Fresh Del Monte

Better Choice

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Better Choice has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Better Choice is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fresh Del Monte

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Better Choice and Fresh Del

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

The idea behind Better Choice and Fresh Del Monte 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .