Correlation Between Simply Good and Beyond Meat

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

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

Diversification Opportunities for Simply Good and Beyond Meat

-0.69

Correlation Coefficient

Simply Good  Beyond Meat

Excellent diversification

The 3 months correlation between Simply and Beyond is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and Simply 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 Simply Good Foods are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Simply Good i.e., Simply Good and Beyond Meat go up and down completely randomly.

Pair Corralation between Simply Good and Beyond Meat

Given the investment horizon of 90 days Simply Good Foods is expected to generate 0.32 times more return on investment than Beyond Meat. However, Simply Good Foods is 3.11 times less risky than Beyond Meat. It trades about 0.02 of its potential returns per unit of risk. Beyond Meat is currently generating about 0.0 per unit of risk. If you would invest  3,780  in Simply Good Foods on August 28, 2024 and sell it today you would earn a total of  204.00  from holding Simply Good Foods or generate 5.4% return on investment over 90 days.

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

Simply Good Foods  vs.  Beyond Meat

Simply Good Foods

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Simply Good disclosed solid returns over the last few months and may actually be approaching a breakup point.

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Simply Good and Beyond Meat

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

The idea behind Simply Good Foods and Beyond Meat 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .