Correlation Between Pinterest and MEDIFAST INC

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

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

Diversification Opportunities for Pinterest and MEDIFAST INC

0.06

Correlation Coefficient

Pinterest  MEDIFAST INC

Significant diversification

The 3 months correlation between Pinterest and MEDIFAST is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and MEDIFAST INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIFAST INC and Pinterest 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 Pinterest are associated (or correlated) with MEDIFAST INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIFAST INC has no effect on the direction of Pinterest i.e., Pinterest and MEDIFAST INC go up and down completely randomly.

Pair Corralation between Pinterest and MEDIFAST INC

Given the investment horizon of 90 days Pinterest is expected to generate 0.96 times more return on investment than MEDIFAST INC. However, Pinterest is 1.04 times less risky than MEDIFAST INC. It trades about 0.01 of its potential returns per unit of risk. MEDIFAST INC is currently generating about -0.06 per unit of risk. If you would invest  3,183  in Pinterest on October 24, 2024 and sell it today you would lose (19.00) from holding Pinterest or give up 0.6% of portfolio value over 90 days.

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

Pinterest  vs.  MEDIFAST INC

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

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

MEDIFAST INC

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pinterest and MEDIFAST INC

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

The idea behind Pinterest and MEDIFAST 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.