Correlation Between Nomad Foods and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and SBI Insurance 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 SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and SBI Insurance Group, you can compare the effects of market volatilities on Nomad Foods and SBI Insurance 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 SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and SBI Insurance.
Diversification Opportunities for Nomad Foods and SBI Insurance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nomad and SBI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group 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 SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of Nomad Foods i.e., Nomad Foods and SBI Insurance go up and down completely randomly.
Pair Corralation between Nomad Foods and SBI Insurance
Assuming the 90 days trading horizon Nomad Foods is expected to generate 1.03 times more return on investment than SBI Insurance. However, Nomad Foods is 1.03 times more volatile than SBI Insurance Group. It trades about 0.28 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.13 per unit of risk. If you would invest 1,654 in Nomad Foods on December 6, 2024 and sell it today you would earn a total of 216.00 from holding Nomad Foods or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. SBI Insurance Group
Performance |
| Timeline |
| Nomad Foods |
| SBI Insurance Group |
Nomad Foods and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and SBI Insurance
The main advantage of trading using opposite Nomad Foods and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, SBI Insurance 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.| Nomad Foods vs. KENEDIX OFFICE INV | ||
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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