Correlation Between ReShape Lifesciences and FOXO Technologies

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

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

Diversification Opportunities for ReShape Lifesciences and FOXO Technologies

-0.06

Correlation Coefficient

ReShape Lifesciences  FOXO Technologies

Good diversification

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

Pair Corralation between ReShape Lifesciences and FOXO Technologies

Given the investment horizon of 90 days ReShape Lifesciences is expected to under-perform the FOXO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ReShape Lifesciences is 2.19 times less risky than FOXO Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The FOXO Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,040  in FOXO Technologies on October 22, 2024 and sell it today you would lose (1,017) from holding FOXO Technologies or give up 97.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

ReShape Lifesciences  vs.  FOXO Technologies

ReShape Lifesciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReShape Lifesciences 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FOXO Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FOXO Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, FOXO Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReShape Lifesciences and FOXO Technologies

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

The idea behind ReShape Lifesciences and FOXO Technologies 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..