Correlation Between MEDIFAST INC and Rollins

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

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

Diversification Opportunities for MEDIFAST INC and Rollins

-0.87

Correlation Coefficient

MEDIFAST INC  Rollins

Pay attention - limited upside

The 3 months correlation between MEDIFAST and Rollins is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding MEDIFAST INC and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and MEDIFAST INC 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 MEDIFAST INC are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of MEDIFAST INC i.e., MEDIFAST INC and Rollins go up and down completely randomly.

Pair Corralation between MEDIFAST INC and Rollins

Considering the 90-day investment horizon MEDIFAST INC is expected to under-perform the Rollins. In addition to that, MEDIFAST INC is 2.36 times more volatile than Rollins. It trades about -0.13 of its total potential returns per unit of risk. Rollins is currently generating about 0.2 per unit of volatility. If you would invest  4,626  in Rollins on December 29, 2024 and sell it today you would earn a total of  680.00  from holding Rollins or generate 14.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MEDIFAST INC  vs.  Rollins

MEDIFAST INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEDIFAST INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rollins

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rollins disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEDIFAST INC and Rollins

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

The idea behind MEDIFAST INC and Rollins 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.