Correlation Between FlexShopper and Vestis

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

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

Diversification Opportunities for FlexShopper and Vestis

0.37

Correlation Coefficient

FlexShopper  Vestis

Weak diversification

The 3 months correlation between FlexShopper and Vestis is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FlexShopper and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and FlexShopper 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 FlexShopper are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of FlexShopper i.e., FlexShopper and Vestis go up and down completely randomly.

Pair Corralation between FlexShopper and Vestis

Given the investment horizon of 90 days FlexShopper is expected to generate 0.39 times more return on investment than Vestis. However, FlexShopper is 2.53 times less risky than Vestis. It trades about 0.06 of its potential returns per unit of risk. Vestis is currently generating about -0.1 per unit of risk. If you would invest  106.00  in FlexShopper on February 16, 2024 and sell it today you would earn a total of  4.00  from holding FlexShopper or generate 3.77% return on investment over 90 days.

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

FlexShopper  vs.  Vestis

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 fairly strong basic indicators, FlexShopper is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vestis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestis 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 June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FlexShopper and Vestis

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

The idea behind FlexShopper and Vestis 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.