Correlation Between Custom Truck and FlexShopper

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

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

Diversification Opportunities for Custom Truck and FlexShopper

0.24

Correlation Coefficient

Custom Truck  FlexShopper

Modest diversification

The 3 months correlation between Custom and FlexShopper is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper and Custom Truck 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 Custom Truck One are associated (or correlated) with FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Custom Truck i.e., Custom Truck and FlexShopper go up and down completely randomly.

Pair Corralation between Custom Truck and FlexShopper

Given the investment horizon of 90 days Custom Truck One is expected to under-perform the FlexShopper. But the stock apears to be less risky and, when comparing its historical volatility, Custom Truck One is 1.44 times less risky than FlexShopper. The stock trades about -0.11 of its potential returns per unit of risk. The FlexShopper is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  121.00  in FlexShopper on January 26, 2024 and sell it today you would lose (14.00) from holding FlexShopper or give up 11.57% of portfolio value over 90 days.

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

Custom Truck One  vs.  FlexShopper

Custom Truck One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Custom Truck One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FlexShopper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic 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 Custom Truck and FlexShopper

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

The idea behind Custom Truck One and FlexShopper 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.