Correlation Between Real Good and Post Holdings

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

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

Diversification Opportunities for Real Good and Post Holdings

-0.52

Correlation Coefficient

Real Good  Post Holdings

Excellent diversification

The 3 months correlation between Real and Post is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings and Real Good 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 Real Good Food are associated (or correlated) with Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Real Good i.e., Real Good and Post Holdings go up and down completely randomly.

Pair Corralation between Real Good and Post Holdings

Considering the 90-day investment horizon Real Good Food is expected to generate 11.49 times more return on investment than Post Holdings. However, Real Good is 11.49 times more volatile than Post Holdings. It trades about 0.06 of its potential returns per unit of risk. Post Holdings is currently generating about 0.09 per unit of risk. If you would invest  31.00  in Real Good Food on July 19, 2024 and sell it today you would earn a total of  4.00  from holding Real Good Food or generate 12.9% return on investment over 90 days.

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

Real Good Food  vs.  Post Holdings

Real Good Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Post Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Post Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Post Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Real Good and Post Holdings

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

The idea behind Real Good Food and Post 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.