Correlation Between Nomad Foods and SBI Holdings
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and SBI Holdings 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 Holdings 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 Holdings, you can compare the effects of market volatilities on Nomad Foods and SBI Holdings 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 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and SBI Holdings.
Diversification Opportunities for Nomad Foods and SBI Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nomad and SBI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings 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 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of Nomad Foods i.e., Nomad Foods and SBI Holdings go up and down completely randomly.
Pair Corralation between Nomad Foods and SBI Holdings
Assuming the 90 days trading horizon Nomad Foods is expected to generate 1.32 times less return on investment than SBI Holdings. In addition to that, Nomad Foods is 1.15 times more volatile than SBI Holdings. It trades about 0.21 of its total potential returns per unit of risk. SBI Holdings is currently generating about 0.32 per unit of volatility. If you would invest 2,420 in SBI Holdings on November 6, 2024 and sell it today you would earn a total of 320.00 from holding SBI Holdings or generate 13.22% 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. SBI Holdings
Performance |
| Timeline |
| Nomad Foods |
| SBI Holdings |
Nomad Foods and SBI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and SBI Holdings
The main advantage of trading using opposite Nomad Foods and SBI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, SBI Holdings 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 Holdings will offset losses from the drop in SBI Holdings' long position.| Nomad Foods vs. NAGOYA RAILROAD | Nomad Foods vs. GOLD ROAD RES | Nomad Foods vs. Transport International Holdings | Nomad Foods vs. Texas Roadhouse |
| SBI Holdings vs. Aristocrat Leisure Limited | SBI Holdings vs. Playtech plc | SBI Holdings vs. Calibre Mining Corp | SBI Holdings vs. Perseus Mining Limited |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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