Correlation Between Flowers Foods and CubeSmart

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

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

Diversification Opportunities for Flowers Foods and CubeSmart

0.15

Correlation Coefficient

Flowers Foods  CubeSmart

Average diversification

The 3 months correlation between Flowers and CubeSmart is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart and Flowers Foods 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 Flowers Foods are associated (or correlated) with CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Flowers Foods i.e., Flowers Foods and CubeSmart go up and down completely randomly.

Pair Corralation between Flowers Foods and CubeSmart

Assuming the 90 days horizon Flowers Foods is expected to under-perform the CubeSmart. In addition to that, Flowers Foods is 1.41 times more volatile than CubeSmart. It trades about -0.13 of its total potential returns per unit of risk. CubeSmart is currently generating about -0.07 per unit of volatility. If you would invest  4,050  in CubeSmart on December 21, 2024 and sell it today you would lose (213.00) from holding CubeSmart or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Flowers Foods  vs.  CubeSmart

Flowers Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flowers Foods 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CubeSmart

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Flowers Foods and CubeSmart

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

The idea behind Flowers Foods and CubeSmart 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.