Correlation Between Nomad Foods and Sea
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and Sea 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 Nomad Foods and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and Sea Limited, you can compare the effects of market volatilities on Nomad Foods and Sea 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 Nomad Foods with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and Sea.
Diversification Opportunities for Nomad Foods and Sea
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nomad and Sea is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Nomad Foods 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 Nomad Foods are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Limited has no effect on the direction of Nomad Foods i.e., Nomad Foods and Sea go up and down completely randomly.
Pair Corralation between Nomad Foods and Sea
Assuming the 90 days trading horizon Nomad Foods is expected to generate 1.95 times less return on investment than Sea. In addition to that, Nomad Foods is 1.21 times more volatile than Sea Limited. It trades about 0.15 of its total potential returns per unit of risk. Sea Limited is currently generating about 0.35 per unit of volatility. If you would invest 10,260 in Sea Limited on November 4, 2024 and sell it today you would earn a total of 1,500 from holding Sea Limited or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. Sea Limited
Performance |
| Timeline |
| Nomad Foods |
| Sea Limited |
Nomad Foods and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and Sea
The main advantage of trading using opposite Nomad Foods and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Nomad Foods vs. MARKET VECTR RETAIL | Nomad Foods vs. PATTIES FOODS | Nomad Foods vs. GWILLI FOOD | Nomad Foods vs. Fast Retailing Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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