Correlation Between Nomad Foods and NH Foods
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and NH Foods 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 NH Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and NH Foods, you can compare the effects of market volatilities on Nomad Foods and NH Foods 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 NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and NH Foods.
Diversification Opportunities for Nomad Foods and NH Foods
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nomad and NI6 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and NH Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of Nomad Foods i.e., Nomad Foods and NH Foods go up and down completely randomly.
Pair Corralation between Nomad Foods and NH Foods
Assuming the 90 days trading horizon Nomad Foods is expected to generate 0.99 times more return on investment than NH Foods. However, Nomad Foods is 1.01 times less risky than NH Foods. It trades about 0.21 of its potential returns per unit of risk. NH Foods is currently generating about -0.19 per unit of risk. If you would invest 1,550 in Nomad Foods on November 7, 2024 and sell it today you would earn a total of 150.00 from holding Nomad Foods or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. NH Foods
Performance |
| Timeline |
| Nomad Foods |
| NH Foods |
Nomad Foods and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and NH Foods
The main advantage of trading using opposite Nomad Foods and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.| Nomad Foods vs. NAGOYA RAILROAD | Nomad Foods vs. GOLD ROAD RES | Nomad Foods vs. Transport International Holdings | Nomad Foods vs. Texas Roadhouse |
| NH Foods vs. T Mobile | NH Foods vs. Air Lease | NH Foods vs. ecotel communication ag | NH Foods vs. MAVEN WIRELESS SWEDEN |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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