Correlation Between BBB Foods and Everspin Technologies

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

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

Diversification Opportunities for BBB Foods and Everspin Technologies

0.84

Correlation Coefficient

BBB Foods  Everspin Technologies

Very poor diversification

The 3 months correlation between BBB and Everspin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies and BBB 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 BBB Foods are associated (or correlated) with Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of BBB Foods i.e., BBB Foods and Everspin Technologies go up and down completely randomly.

Pair Corralation between BBB Foods and Everspin Technologies

Given the investment horizon of 90 days BBB Foods is expected to under-perform the Everspin Technologies. But the stock apears to be less risky and, when comparing its historical volatility, BBB Foods is 1.03 times less risky than Everspin Technologies. The stock trades about -0.13 of its potential returns per unit of risk. The Everspin Technologies is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  623.00  in Everspin Technologies on December 20, 2024 and sell it today you would lose (87.00) from holding Everspin Technologies or give up 13.96% of portfolio value over 90 days.

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

BBB Foods  vs.  Everspin Technologies

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Everspin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BBB Foods and Everspin Technologies

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

The idea behind BBB Foods and Everspin 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.