Correlation Between Bell Food and Leroy Seafood
Can any of the company-specific risk be diversified away by investing in both Bell Food and Leroy Seafood 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 Bell Food and Leroy Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Food Group and Leroy Seafood Group, you can compare the effects of market volatilities on Bell Food and Leroy Seafood 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 Bell Food with a short position of Leroy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Leroy Seafood.
Diversification Opportunities for Bell Food and Leroy Seafood
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bell and Leroy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group and Bell Food 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 Bell Food Group are associated (or correlated) with Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Bell Food i.e., Bell Food and Leroy Seafood go up and down completely randomly.
Pair Corralation between Bell Food and Leroy Seafood
Assuming the 90 days trading horizon Bell Food Group is expected to generate 0.95 times more return on investment than Leroy Seafood. However, Bell Food Group is 1.05 times less risky than Leroy Seafood. It trades about -0.01 of its potential returns per unit of risk. Leroy Seafood Group is currently generating about -0.07 per unit of risk. If you would invest 25,400 in Bell Food Group on November 28, 2024 and sell it today you would lose (75.00) from holding Bell Food Group or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Food Group vs. Leroy Seafood Group
Performance |
| Timeline |
| Bell Food Group |
| Leroy Seafood Group |
Bell Food and Leroy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Leroy Seafood
The main advantage of trading using opposite Bell Food and Leroy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Leroy Seafood 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 Leroy Seafood will offset losses from the drop in Leroy Seafood's long position.| Bell Food vs. Metals Exploration Plc | Bell Food vs. Atalaya Mining | Bell Food vs. Empire Metals Limited | Bell Food vs. Fulcrum Metals PLC |
| Leroy Seafood vs. Vitec Software Group | Leroy Seafood vs. Software Circle plc | Leroy Seafood vs. Eastinco Mining Exploration | Leroy Seafood vs. Southwest Airlines Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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