Correlation Between HR Block and Medifast

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Can any of the company-specific risk be diversified away by investing in both HR Block and Medifast 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 HR Block and Medifast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HR Block and Medifast, you can compare the effects of market volatilities on HR Block and Medifast 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 HR Block with a short position of Medifast. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Block and Medifast.

Diversification Opportunities for HR Block and Medifast

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between HR Block and Medifast is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding HR Block and Medifast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medifast and HR Block 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 HR Block are associated (or correlated) with Medifast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medifast has no effect on the direction of HR Block i.e., HR Block and Medifast go up and down completely randomly.

Pair Corralation between HR Block and Medifast

Considering the 90-day investment horizon HR Block is expected to generate 0.77 times more return on investment than Medifast. However, HR Block is 1.31 times less risky than Medifast. It trades about 0.1 of its potential returns per unit of risk. Medifast is currently generating about -0.01 per unit of risk. If you would invest  1,666  in HR Block on July 3, 2022 and sell it today you would earn a total of  2,588  from holding HR Block or generate 155.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HR Block  vs.  Medifast

 Performance (%) 
       Timeline  
HR Block 
HR Block Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HR Block are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, HR Block sustained solid returns over the last few months and may actually be approaching a breakup point.

HR Block Price Channel

Medifast 
Medifast Performance
0 of 100
Over the last 90 days Medifast has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Medifast Price Channel

HR Block and Medifast Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HR Block and Medifast

The main advantage of trading using opposite HR Block and Medifast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Block position performs unexpectedly, Medifast 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 Medifast will offset losses from the drop in Medifast's long position.
HR Block vs. Amazon Inc
The idea behind HR Block and Medifast 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.
Medifast vs. Amazon Inc
Check out your portfolio center. 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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