Correlation Between FlexShopper and Custom Truck

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

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

Diversification Opportunities for FlexShopper and Custom Truck

0.74

Correlation Coefficient

FlexShopper  Custom Truck

Poor diversification

The 3 months correlation between FlexShopper and Custom is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FlexShopper and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and FlexShopper 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 FlexShopper are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of FlexShopper i.e., FlexShopper and Custom Truck go up and down completely randomly.

Pair Corralation between FlexShopper and Custom Truck

Given the investment horizon of 90 days FlexShopper is expected to generate 1.43 times more return on investment than Custom Truck. However, FlexShopper is 1.43 times more volatile than Custom Truck One. It trades about 0.2 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.14 per unit of risk. If you would invest  100.00  in FlexShopper on September 17, 2024 and sell it today you would earn a total of  81.50  from holding FlexShopper or generate 81.5% return on investment over 90 days.

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

FlexShopper  vs.  Custom Truck One

FlexShopper

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShopper are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FlexShopper showed solid returns over the last few months and may actually be approaching a breakup point.

Custom Truck One

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FlexShopper and Custom Truck

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

The idea behind FlexShopper and Custom Truck One 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.