Correlation Between Beyond Meat and Better Choice

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

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

Diversification Opportunities for Beyond Meat and Better Choice

-0.62

Correlation Coefficient

Beyond Meat  Better Choice

Excellent diversification

The 3 months correlation between Beyond and Better is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Beyond Meat 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 Beyond Meat are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Beyond Meat i.e., Beyond Meat and Better Choice go up and down completely randomly.

Pair Corralation between Beyond Meat and Better Choice

Given the investment horizon of 90 days Beyond Meat is expected to under-perform the Better Choice. But the stock apears to be less risky and, when comparing its historical volatility, Beyond Meat is 1.62 times less risky than Better Choice. The stock trades about -0.12 of its potential returns per unit of risk. The Better Choice is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Better Choice on October 6, 2024 and sell it today you would earn a total of  28.00  from holding Better Choice or generate 13.46% return on investment over 90 days.

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

Beyond Meat  vs.  Better Choice

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Better Choice

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and Better Choice

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

The idea behind Beyond Meat and Better Choice 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 Commodity Directory module to find actively traded commodities issued by global exchanges.