Correlation Between FitLife Brands and Clorox

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

By analyzing existing cross correlation between FitLife Brands Common and The Clorox, you can compare the effects of market volatilities on FitLife Brands and Clorox 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 FitLife Brands with a short position of Clorox. Check out your portfolio center. Please also check ongoing floating volatility patterns of FitLife Brands and Clorox.

Diversification Opportunities for FitLife Brands and Clorox

-0.84

Correlation Coefficient

FitLife Brands  Clorox

Pay attention - limited upside

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

Pair Corralation between FitLife Brands and Clorox

Given the investment horizon of 90 days FitLife Brands Common is expected to generate 2.04 times more return on investment than Clorox. However, FitLife Brands is 2.04 times more volatile than The Clorox. It trades about 0.22 of its potential returns per unit of risk. The Clorox is currently generating about -0.17 per unit of risk. If you would invest  2,210  in FitLife Brands Common on February 21, 2024 and sell it today you would earn a total of  565.00  from holding FitLife Brands Common or generate 25.57% return on investment over 90 days.

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

FitLife Brands Common  vs.  The Clorox

FitLife Brands Common

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FitLife Brands Common are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, FitLife Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Clorox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Clorox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FitLife Brands and Clorox

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

The idea behind FitLife Brands Common and The Clorox 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.