Correlation Between Smart For and Laird Superfood

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

By analyzing existing cross correlation between Smart for Life, and Laird Superfood, you can compare the effects of market volatilities on Smart For and Laird Superfood 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 Smart For with a short position of Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart For and Laird Superfood.

Diversification Opportunities for Smart For and Laird Superfood

-0.89

Correlation Coefficient

Smart For  Laird Superfood

Pay attention - limited upside

The 3 months correlation between Smart and Laird is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood and Smart For 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 Smart for Life, are associated (or correlated) with Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Smart For i.e., Smart For and Laird Superfood go up and down completely randomly.

Pair Corralation between Smart For and Laird Superfood

Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Laird Superfood. In addition to that, Smart For is 2.49 times more volatile than Laird Superfood. It trades about -0.21 of its total potential returns per unit of risk. Laird Superfood is currently generating about 0.1 per unit of volatility. If you would invest  491.00  in Laird Superfood on September 3, 2024 and sell it today you would earn a total of  415.00  from holding Laird Superfood or generate 84.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	64.0%
Values	Daily Returns

Smart for Life,  vs.  Laird Superfood

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Laird Superfood

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laird Superfood are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Laird Superfood reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart For and Laird Superfood

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

The idea behind Smart for Life, and Laird Superfood 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.