Correlation Between Laird Superfood and Nuzee

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

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

Diversification Opportunities for Laird Superfood and Nuzee

-0.68

Correlation Coefficient

Laird Superfood  Nuzee

Excellent diversification

The 3 months correlation between Laird and Nuzee is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Laird Superfood and Nuzee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuzee Inc and Laird Superfood 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 Laird Superfood are associated (or correlated) with Nuzee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuzee Inc has no effect on the direction of Laird Superfood i.e., Laird Superfood and Nuzee go up and down completely randomly.

Pair Corralation between Laird Superfood and Nuzee

Considering the 90-day investment horizon Laird Superfood is expected to generate 1.35 times less return on investment than Nuzee. But when comparing it to its historical volatility, Laird Superfood is 3.94 times less risky than Nuzee. It trades about 0.11 of its potential returns per unit of risk. Nuzee Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  813.00  in Nuzee Inc on September 12, 2024 and sell it today you would lose (714.00) from holding Nuzee Inc or give up 87.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.84%
Values	Daily Returns

Laird Superfood  vs.  Nuzee Inc

Laird Superfood

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laird Superfood are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Laird Superfood reported solid returns over the last few months and may actually be approaching a breakup point.

Nuzee Inc

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nuzee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Nuzee exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laird Superfood and Nuzee

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

The idea behind Laird Superfood and Nuzee Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.