Correlation Between Upstart Holdings and Cult Food

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

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

Diversification Opportunities for Upstart Holdings and Cult Food

-0.61

Correlation Coefficient

Upstart Holdings  Cult Food

Excellent diversification

The 3 months correlation between Upstart and Cult is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and Cult Food Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cult Food Science and Upstart Holdings 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 Upstart Holdings are associated (or correlated) with Cult Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cult Food Science has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and Cult Food go up and down completely randomly.

Pair Corralation between Upstart Holdings and Cult Food

Given the investment horizon of 90 days Upstart Holdings is expected to generate 1.18 times more return on investment than Cult Food. However, Upstart Holdings is 1.18 times more volatile than Cult Food Science. It trades about 0.1 of its potential returns per unit of risk. Cult Food Science is currently generating about 0.01 per unit of risk. If you would invest  4,318  in Upstart Holdings on October 10, 2024 and sell it today you would earn a total of  1,707  from holding Upstart Holdings or generate 39.53% return on investment over 90 days.

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

Upstart Holdings  vs.  Cult Food Science

Upstart Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cult Food Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cult Food Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cult Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Upstart Holdings and Cult Food

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

The idea behind Upstart Holdings and Cult Food Science 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.