Correlation Between Stryve Foods and Scepter Holdings

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

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

Diversification Opportunities for Stryve Foods and Scepter Holdings

-0.07

Correlation Coefficient

Stryve Foods  Scepter Holdings

Good diversification

The 3 months correlation between Stryve and Scepter is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stryve Foods and Scepter Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scepter Holdings and Stryve Foods 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 Stryve Foods are associated (or correlated) with Scepter Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scepter Holdings has no effect on the direction of Stryve Foods i.e., Stryve Foods and Scepter Holdings go up and down completely randomly.

Pair Corralation between Stryve Foods and Scepter Holdings

Given the investment horizon of 90 days Stryve Foods is expected to under-perform the Scepter Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Stryve Foods is 4.24 times less risky than Scepter Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Scepter Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Scepter Holdings on September 12, 2024 and sell it today you would earn a total of  0.04  from holding Scepter Holdings or generate 44.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Stryve Foods  vs.  Scepter Holdings

Stryve Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stryve Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Scepter Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scepter Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Scepter Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stryve Foods and Scepter Holdings

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

The idea behind Stryve Foods and Scepter Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.