Correlation Between Sligro Food and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Sligro Food and Fortune 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 Sligro Food and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sligro Food Group and Fortune Brands Home, you can compare the effects of market volatilities on Sligro Food and Fortune 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 Sligro Food with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Fortune Brands.
Diversification Opportunities for Sligro Food and Fortune Brands
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sligro and Fortune is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Sligro Food 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 Sligro Food Group are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Sligro Food i.e., Sligro Food and Fortune Brands go up and down completely randomly.
Pair Corralation between Sligro Food and Fortune Brands
Assuming the 90 days trading horizon Sligro Food Group is expected to under-perform the Fortune Brands. But the stock apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 1.48 times less risky than Fortune Brands. The stock trades about -0.11 of its potential returns per unit of risk. The Fortune Brands Home is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,623 in Fortune Brands Home on September 3, 2024 and sell it today you would earn a total of 1,222 from holding Fortune Brands Home or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.38% |
| Values | Daily Returns |
Sligro Food Group vs. Fortune Brands Home
Performance |
| Timeline |
| Sligro Food Group |
| Fortune Brands Home |
Sligro Food and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sligro Food and Fortune Brands
The main advantage of trading using opposite Sligro Food and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food position performs unexpectedly, Fortune 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Sligro Food vs. Catalyst Media Group | Sligro Food vs. CATLIN GROUP | Sligro Food vs. RTW Venture Fund | Sligro Food vs. Secure Property Development |
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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 the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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