Correlation Between Simply Good and Freshpet
Can any of the company-specific risk be diversified away by investing in both Simply Good and Freshpet 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 Simply Good and Freshpet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Good Foods and Freshpet, you can compare the effects of market volatilities on Simply Good and Freshpet 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 Simply Good with a short position of Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Freshpet.
Diversification Opportunities for Simply Good and Freshpet
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simply and Freshpet is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet and Simply Good 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 Simply Good Foods are associated (or correlated) with Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Simply Good i.e., Simply Good and Freshpet go up and down completely randomly.
Pair Corralation between Simply Good and Freshpet
Given the investment horizon of 90 days Simply Good Foods is expected to generate 0.6 times more return on investment than Freshpet. However, Simply Good Foods is 1.66 times less risky than Freshpet. It trades about 0.21 of its potential returns per unit of risk. Freshpet is currently generating about 0.04 per unit of risk. If you would invest 3,360 in Simply Good Foods on September 18, 2024 and sell it today you would earn a total of 630.00 from holding Simply Good Foods or generate 18.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Simply Good Foods vs. Freshpet
Performance |
Timeline |
Simply Good Foods |
Freshpet |
Simply Good and Freshpet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Simply Good and Freshpet
The main advantage of trading using opposite Simply Good and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet's long position.Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
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 CEOs Directory module to screen CEOs from public companies around the world.
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