Correlation Between Nomad Foods and AEON STORES
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and AEON STORES 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 AEON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and AEON STORES, you can compare the effects of market volatilities on Nomad Foods and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and AEON STORES.
Diversification Opportunities for Nomad Foods and AEON STORES
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nomad and AEON is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of Nomad Foods i.e., Nomad Foods and AEON STORES go up and down completely randomly.
Pair Corralation between Nomad Foods and AEON STORES
If you would invest 1,600 in Nomad Foods on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Nomad Foods or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nomad Foods vs. AEON STORES
Performance |
| Timeline |
| Nomad Foods |
| AEON STORES |
Nomad Foods and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and AEON STORES
The main advantage of trading using opposite Nomad Foods and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc |
| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple 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 the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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