Correlation Between Better Choice and Sharing Services

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

By analyzing existing cross correlation between Better Choice and Sharing Services Global, you can compare the effects of market volatilities on Better Choice and Sharing Services 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 Sharing Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Choice and Sharing Services.

Diversification Opportunities for Better Choice and Sharing Services

0.83

Correlation Coefficient

Better Choice  Sharing Services

Very poor diversification

The 3 months correlation between Better and Sharing is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Better Choice and Sharing Services Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Services Global 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 Sharing Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Services Global has no effect on the direction of Better Choice i.e., Better Choice and Sharing Services go up and down completely randomly.

Pair Corralation between Better Choice and Sharing Services

Given the investment horizon of 90 days Better Choice is expected to generate 0.41 times more return on investment than Sharing Services. However, Better Choice is 2.46 times less risky than Sharing Services. It trades about -0.02 of its potential returns per unit of risk. Sharing Services Global is currently generating about -0.04 per unit of risk. If you would invest  254.00  in Better Choice on August 31, 2024 and sell it today you would lose (56.00) from holding Better Choice or give up 22.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Better Choice  vs.  Sharing Services Global

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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Sharing Services Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharing Services Global 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 basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Better Choice and Sharing Services

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

The idea behind Better Choice and Sharing Services Global 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.