Correlation Between Custom Truck and FlexShopper

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

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

Diversification Opportunities for Custom Truck and FlexShopper

-0.13

Correlation Coefficient

Custom Truck  FlexShopper

Good diversification

The 3 months correlation between Custom and FlexShopper is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper and Custom Truck 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 Custom Truck One are associated (or correlated) with FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Custom Truck i.e., Custom Truck and FlexShopper go up and down completely randomly.

Pair Corralation between Custom Truck and FlexShopper

Given the investment horizon of 90 days Custom Truck One is expected to generate 0.69 times more return on investment than FlexShopper. However, Custom Truck One is 1.46 times less risky than FlexShopper. It trades about 0.01 of its potential returns per unit of risk. FlexShopper is currently generating about -0.02 per unit of risk. If you would invest  481.00  in Custom Truck One on December 29, 2024 and sell it today you would lose (16.00) from holding Custom Truck One or give up 3.33% of portfolio value over 90 days.

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

Custom Truck One  vs.  FlexShopper

Custom Truck One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Custom Truck One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

FlexShopper

Risk-Adjusted Performance

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic 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 Custom Truck and FlexShopper

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

The idea behind Custom Truck One and FlexShopper 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.