Correlation Between Target and Healthy Choice

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

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

Diversification Opportunities for Target and Healthy Choice

0.73

Correlation Coefficient

Target  Healthy Choice

Poor diversification

The 3 months correlation between Target and Healthy is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Target and Healthy Choice Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthy Choice Wellness and Target 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 Target are associated (or correlated) with Healthy Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthy Choice Wellness has no effect on the direction of Target i.e., Target and Healthy Choice go up and down completely randomly.

Pair Corralation between Target and Healthy Choice

Considering the 90-day investment horizon Target is expected to generate 0.09 times more return on investment than Healthy Choice. However, Target is 11.23 times less risky than Healthy Choice. It trades about 0.02 of its potential returns per unit of risk. Healthy Choice Wellness is currently generating about -0.03 per unit of risk. If you would invest  13,529  in Target on October 8, 2024 and sell it today you would earn a total of  50.00  from holding Target or generate 0.37% return on investment over 90 days.

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

Target  vs.  Healthy Choice Wellness

Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Healthy Choice Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthy Choice Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Target and Healthy Choice

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

The idea behind Target and Healthy Choice Wellness 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.