Correlation Between LEROY SEAFOOD and Freshpet

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

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

Diversification Opportunities for LEROY SEAFOOD and Freshpet

0.34

Correlation Coefficient

LEROY SEAFOOD  Freshpet

Weak diversification

The 3 months correlation between LEROY and Freshpet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LEROY SEAFOOD GRUNSPADR and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet and LEROY SEAFOOD 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 LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD i.e., LEROY SEAFOOD and Freshpet go up and down completely randomly.

Pair Corralation between LEROY SEAFOOD and Freshpet

Assuming the 90 days trading horizon LEROY SEAFOOD is expected to generate 3.2 times less return on investment than Freshpet. In addition to that, LEROY SEAFOOD is 1.0 times more volatile than Freshpet. It trades about 0.03 of its total potential returns per unit of risk. Freshpet is currently generating about 0.09 per unit of volatility. If you would invest  6,656  in Freshpet on September 24, 2024 and sell it today you would earn a total of  6,844  from holding Freshpet or generate 102.82% return on investment over 90 days.

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

LEROY SEAFOOD GRUNSPADR  vs.  Freshpet

LEROY SEAFOOD GRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Freshpet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freshpet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Freshpet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LEROY SEAFOOD and Freshpet

The main advantage of trading using opposite LEROY SEAFOOD and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEROY SEAFOOD 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.

The idea behind LEROY SEAFOOD GRUNSPADR and Freshpet 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.