Correlation Between Fomo Worldwide and Primo Brands

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

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

Diversification Opportunities for Fomo Worldwide and Primo Brands

-0.71

Correlation Coefficient

Fomo Worldwide  Primo Brands

Pay attention - limited upside

The 3 months correlation between Fomo and Primo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fomo Worldwide and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands and Fomo Worldwide 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 Fomo Worldwide are associated (or correlated) with Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Fomo Worldwide i.e., Fomo Worldwide and Primo Brands go up and down completely randomly.

Pair Corralation between Fomo Worldwide and Primo Brands

Given the investment horizon of 90 days Fomo Worldwide is expected to generate 101.71 times more return on investment than Primo Brands. However, Fomo Worldwide is 101.71 times more volatile than Primo Brands. It trades about 0.18 of its potential returns per unit of risk. Primo Brands is currently generating about 0.14 per unit of risk. If you would invest  0.39  in Fomo Worldwide on September 24, 2024 and sell it today you would lose (0.39) from holding Fomo Worldwide or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.28%
Values	Daily Returns

Fomo Worldwide  vs.  Primo Brands

Fomo Worldwide

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fomo Worldwide are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fomo Worldwide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Primo Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fomo Worldwide and Primo Brands

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

The idea behind Fomo Worldwide and Primo 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.