Correlation Between Flexible Solutions and Avon Products

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

By analyzing existing cross correlation between Flexible Solutions International and Avon Products, you can compare the effects of market volatilities on Flexible Solutions and Avon Products 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 Flexible Solutions with a short position of Avon Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Avon Products.

Diversification Opportunities for Flexible Solutions and Avon Products

0.0

Correlation Coefficient

Flexible Solutions  Avon Products

Pay attention - limited upside

The 3 months correlation between Flexible and Avon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Avon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avon Products and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Avon Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avon Products has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Avon Products go up and down completely randomly.

Pair Corralation between Flexible Solutions and Avon Products

If you would invest  194.00  in Flexible Solutions International on February 23, 2024 and sell it today you would earn a total of  21.00  from holding Flexible Solutions International or generate 10.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Flexible Solutions Internation  vs.  Avon Products

Flexible Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Avon Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avon Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avon Products is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Flexible Solutions and Avon Products

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

The idea behind Flexible Solutions International and Avon Products 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.