Correlation Between For Earth and Maven Brands

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

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

Diversification Opportunities for For Earth and Maven Brands

-0.18

Correlation Coefficient

For Earth  Maven Brands

Good diversification

The 3 months correlation between For and Maven is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding For The Earth and Maven Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Brands and For Earth 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 For The Earth are associated (or correlated) with Maven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Brands has no effect on the direction of For Earth i.e., For Earth and Maven Brands go up and down completely randomly.

Pair Corralation between For Earth and Maven Brands

Given the investment horizon of 90 days For The Earth is expected to generate 1.22 times more return on investment than Maven Brands. However, For Earth is 1.22 times more volatile than Maven Brands. It trades about 0.07 of its potential returns per unit of risk. Maven Brands is currently generating about 0.07 per unit of risk. If you would invest  0.01  in For The Earth on October 23, 2024 and sell it today you would earn a total of  0.00  from holding For The Earth or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

For The Earth  vs.  Maven Brands

For The Earth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days For The Earth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, For Earth is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Maven Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maven Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with For Earth and Maven Brands

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

The idea behind For The Earth and Maven Brands 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.