Correlation Between Nomad Foods and China International
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and China International 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 China International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and China International Marine, you can compare the effects of market volatilities on Nomad Foods and China International 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 China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and China International.
Diversification Opportunities for Nomad Foods and China International
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nomad and China is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Nomad Foods i.e., Nomad Foods and China International go up and down completely randomly.
Pair Corralation between Nomad Foods and China International
Assuming the 90 days trading horizon Nomad Foods is expected to generate 0.33 times more return on investment than China International. However, Nomad Foods is 2.99 times less risky than China International. It trades about 0.21 of its potential returns per unit of risk. China International Marine is currently generating about 0.07 per unit of risk. If you would invest 1,550 in Nomad Foods on November 6, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. China International Marine
Performance |
| Timeline |
| Nomad Foods |
| China International |
Nomad Foods and China International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and China International
The main advantage of trading using opposite Nomad Foods and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, China International 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 China International will offset losses from the drop in China International's long position.| Nomad Foods vs. NAGOYA RAILROAD | Nomad Foods vs. GOLD ROAD RES | Nomad Foods vs. Transport International Holdings | Nomad Foods vs. Texas Roadhouse |
| China International vs. JD SPORTS FASH | China International vs. ANTA SPORTS PRODUCT | China International vs. USWE SPORTS AB | China International vs. PLAYTIKA HOLDING DL 01 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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