Correlation Between My Foodie and RedFlow

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

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

Diversification Opportunities for My Foodie and RedFlow

1.0

Correlation Coefficient

My Foodie  RedFlow

No risk reduction

The 3 months correlation between MBX and RedFlow is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding My Foodie Box and RedFlow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedFlow and My Foodie 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 My Foodie Box are associated (or correlated) with RedFlow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedFlow has no effect on the direction of My Foodie i.e., My Foodie and RedFlow go up and down completely randomly.

Pair Corralation between My Foodie and RedFlow

If you would invest  9.70  in RedFlow on December 29, 2024 and sell it today you would earn a total of  0.00  from holding RedFlow or generate 0.0% return on investment over 90 days.

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

My Foodie Box  vs.  RedFlow

My Foodie Box

Risk-Adjusted Performance

Very Weak

Over the last 90 days My Foodie Box has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, My Foodie is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RedFlow

Risk-Adjusted Performance

Very Weak

Over the last 90 days RedFlow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RedFlow is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with My Foodie and RedFlow

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

The idea behind My Foodie Box and RedFlow 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .