Correlation Between DNA Brands and Fbec Worldwide

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

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

Diversification Opportunities for DNA Brands and Fbec Worldwide

-0.21

Correlation Coefficient

DNA Brands  Fbec Worldwide

Very good diversification

The 3 months correlation between DNA and Fbec is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DNA Brands and Fbec Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fbec Worldwide and DNA Brands 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 DNA Brands are associated (or correlated) with Fbec Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fbec Worldwide has no effect on the direction of DNA Brands i.e., DNA Brands and Fbec Worldwide go up and down completely randomly.

Pair Corralation between DNA Brands and Fbec Worldwide

Given the investment horizon of 90 days DNA Brands is expected to generate 6.68 times less return on investment than Fbec Worldwide. But when comparing it to its historical volatility, DNA Brands is 3.68 times less risky than Fbec Worldwide. It trades about 0.14 of its potential returns per unit of risk. Fbec Worldwide is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Fbec Worldwide on September 3, 2024 and sell it today you would lose (0.02) from holding Fbec Worldwide or give up 20.0% of portfolio value over 90 days.

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

DNA Brands  vs.  Fbec Worldwide

DNA Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DNA Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, DNA Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Fbec Worldwide

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fbec Worldwide are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Fbec Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DNA Brands and Fbec Worldwide

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

The idea behind DNA Brands and Fbec Worldwide 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.