Correlation Between EnVVeno Medical and BBB Foods

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

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

Diversification Opportunities for EnVVeno Medical and BBB Foods

0.08

Correlation Coefficient

EnVVeno Medical  BBB Foods

Significant diversification

The 3 months correlation between EnVVeno and BBB is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding enVVeno Medical Corp and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and EnVVeno Medical 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 enVVeno Medical Corp are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of EnVVeno Medical i.e., EnVVeno Medical and BBB Foods go up and down completely randomly.

Pair Corralation between EnVVeno Medical and BBB Foods

Given the investment horizon of 90 days enVVeno Medical Corp is expected to under-perform the BBB Foods. But the stock apears to be less risky and, when comparing its historical volatility, enVVeno Medical Corp is 1.05 times less risky than BBB Foods. The stock trades about -0.23 of its potential returns per unit of risk. The BBB Foods is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,191  in BBB Foods on September 15, 2024 and sell it today you would lose (318.00) from holding BBB Foods or give up 9.97% of portfolio value over 90 days.

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

enVVeno Medical Corp  vs.  BBB Foods

enVVeno Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enVVeno Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BBB Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EnVVeno Medical and BBB Foods

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

The idea behind enVVeno Medical Corp and BBB Foods 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 Global Correlations module to find global opportunities by holding instruments from different markets.