Correlation Between Reeds and DNA Brands

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

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

Diversification Opportunities for Reeds and DNA Brands

0.0

Correlation Coefficient

Reeds  DNA Brands

Pay attention - limited upside

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

Pair Corralation between Reeds and DNA Brands

If you would invest  0.01  in DNA Brands on May 5, 2025 and sell it today you would earn a total of  0.00  from holding DNA Brands or generate 0.0% return on investment over 90 days.

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

Reeds Inc  vs.  DNA Brands

Reeds Inc

Risk-Adjusted Performance

Very Weak

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

DNA Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days DNA Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DNA Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reeds and DNA Brands

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

The idea behind Reeds Inc and DNA Brands 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 Transaction History module to view history of all your transactions and understand their impact on performance.