Correlation Between MEDIFAST INC and Franchise

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Can any of the company-specific risk be diversified away by investing in both MEDIFAST INC and Franchise 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 MEDIFAST INC and Franchise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDIFAST INC and Franchise Group, you can compare the effects of market volatilities on MEDIFAST INC and Franchise 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 MEDIFAST INC with a short position of Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIFAST INC and Franchise.

Diversification Opportunities for MEDIFAST INC and Franchise

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between MEDIFAST INC and Franchise

If you would invest  0.00  in Franchise Group on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Franchise Group or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy1.61%
ValuesDaily Returns

MEDIFAST INC  vs.  Franchise Group

 Performance 
       Timeline  
MEDIFAST INC 

Risk-Adjusted Performance

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Over the last 90 days MEDIFAST INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Franchise Group 

Risk-Adjusted Performance

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

MEDIFAST INC and Franchise Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MEDIFAST INC and Franchise

The main advantage of trading using opposite MEDIFAST INC and Franchise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIFAST INC position performs unexpectedly, Franchise 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 Franchise will offset losses from the drop in Franchise's long position.
The idea behind MEDIFAST INC and Franchise Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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