Correlation Between Safety Shot and Vita Coco

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

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

Diversification Opportunities for Safety Shot and Vita Coco

-0.6

Correlation Coefficient

Safety Shot  Vita Coco

Excellent diversification

The 3 months correlation between Safety and Vita is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco and Safety Shot 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 Safety Shot are associated (or correlated) with Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of Safety Shot i.e., Safety Shot and Vita Coco go up and down completely randomly.

Pair Corralation between Safety Shot and Vita Coco

Assuming the 90 days horizon Safety Shot is expected to generate 8.43 times more return on investment than Vita Coco. However, Safety Shot is 8.43 times more volatile than Vita Coco. It trades about 0.05 of its potential returns per unit of risk. Vita Coco is currently generating about 0.06 per unit of risk. If you would invest  132.00  in Safety Shot on September 25, 2024 and sell it today you would lose (113.00) from holding Safety Shot or give up 85.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.97%
Values	Daily Returns

Safety Shot  vs.  Vita Coco

Safety Shot

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Vita Coco

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safety Shot and Vita Coco

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

The idea behind Safety Shot and Vita Coco 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.