Correlation Between Energy Focu and Casper Sleep

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

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

Diversification Opportunities for Energy Focu and Casper Sleep

0.0

Correlation Coefficient

Energy Focu  Casper Sleep

Pay attention - limited upside

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

Pair Corralation between Energy Focu and Casper Sleep

If you would invest  146.00  in Energy Focu on February 9, 2024 and sell it today you would earn a total of  15.00  from holding Energy Focu or generate 10.27% return on investment over 90 days.

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

Energy Focu  vs.  Casper Sleep

Energy Focu

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Casper Sleep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casper Sleep has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Casper Sleep 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 Energy Focu and Casper Sleep

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

The idea behind Energy Focu and Casper Sleep 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.