Correlation Between Rite Aid and Fire Flower

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

By analyzing existing cross correlation between Rite Aid and Fire Flower Holdings, you can compare the effects of market volatilities on Rite Aid and Fire Flower 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 Rite Aid with a short position of Fire Flower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Fire Flower.

Diversification Opportunities for Rite Aid and Fire Flower

0.0

Correlation Coefficient

Rite Aid  Fire Flower

Pay attention - limited upside

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

Pair Corralation between Rite Aid and Fire Flower

Considering the 90-day investment horizon Rite Aid is expected to under-perform the Fire Flower. In addition to that, Rite Aid is 1.43 times more volatile than Fire Flower Holdings. It trades about -0.09 of its total potential returns per unit of risk. Fire Flower Holdings is currently generating about -0.06 per unit of volatility. If you would invest  22.00  in Fire Flower Holdings on August 27, 2024 and sell it today you would lose (10.00) from holding Fire Flower Holdings or give up 45.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	12.64%
Values	Daily Returns

Rite Aid  vs.  Fire Flower Holdings

Rite Aid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fire Flower Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rite Aid and Fire Flower

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

The idea behind Rite Aid and Fire Flower Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.