Correlation Between Darling Ingredients and Stryve Foods

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

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

Diversification Opportunities for Darling Ingredients and Stryve Foods

-0.55

Correlation Coefficient

Darling Ingredients  Stryve Foods

Excellent diversification

The 3 months correlation between Darling and Stryve is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Darling Ingredients and Stryve Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryve Foods and Darling Ingredients 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 Darling Ingredients are associated (or correlated) with Stryve Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryve Foods has no effect on the direction of Darling Ingredients i.e., Darling Ingredients and Stryve Foods go up and down completely randomly.

Pair Corralation between Darling Ingredients and Stryve Foods

Considering the 90-day investment horizon Darling Ingredients is expected to under-perform the Stryve Foods. But the stock apears to be less risky and, when comparing its historical volatility, Darling Ingredients is 1.91 times less risky than Stryve Foods. The stock trades about -0.1 of its potential returns per unit of risk. The Stryve Foods is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Stryve Foods on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Stryve Foods or generate 2.33% return on investment over 90 days.

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

Darling Ingredients  vs.  Stryve Foods

Darling Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stryve Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stryve Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Darling Ingredients and Stryve Foods

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

The idea behind Darling Ingredients and Stryve Foods 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.