Correlation Between RadNet and BBB Foods

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

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

Diversification Opportunities for RadNet and BBB Foods

-0.22

Correlation Coefficient

RadNet  BBB Foods

Very good diversification

The 3 months correlation between RadNet and BBB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and RadNet 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 RadNet Inc 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 RadNet i.e., RadNet and BBB Foods go up and down completely randomly.

Pair Corralation between RadNet and BBB Foods

Given the investment horizon of 90 days RadNet Inc is expected to generate 0.89 times more return on investment than BBB Foods. However, RadNet Inc is 1.12 times less risky than BBB Foods. It trades about 0.11 of its potential returns per unit of risk. BBB Foods is currently generating about 0.09 per unit of risk. If you would invest  3,662  in RadNet Inc on October 6, 2024 and sell it today you would earn a total of  3,489  from holding RadNet Inc or generate 95.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

RadNet Inc  vs.  BBB Foods

RadNet Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RadNet and BBB Foods

The main advantage of trading using opposite RadNet and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet 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 RadNet Inc 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.