Correlation Between Bell Food and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Bell Food and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Bell Food and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Spotify Technology.
Diversification Opportunities for Bell Food and Spotify Technology
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bell and Spotify is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Bell Food i.e., Bell Food and Spotify Technology go up and down completely randomly.
Pair Corralation between Bell Food and Spotify Technology
Assuming the 90 days trading horizon Bell Food Group is expected to under-perform the Spotify Technology. But the stock apears to be less risky and, when comparing its historical volatility, Bell Food Group is 1.36 times less risky than Spotify Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Spotify Technology SA is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 44,775 in Spotify Technology SA on November 6, 2024 and sell it today you would earn a total of 8,755 from holding Spotify Technology SA or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Food Group vs. Spotify Technology SA
Performance |
| Timeline |
| Bell Food Group |
| Spotify Technology |
Bell Food and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Spotify Technology
The main advantage of trading using opposite Bell Food and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Bell Food vs. Cars Inc | Bell Food vs. AMG Advanced Metallurgical | Bell Food vs. Fulcrum Metals PLC | Bell Food vs. Vienna Insurance Group |
| Spotify Technology vs. St Galler Kantonalbank | Spotify Technology vs. Sydbank | Spotify Technology vs. TBC Bank Group | Spotify Technology vs. Accesso Technology Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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