Correlation Between Bell Food and Carnival PLC
Can any of the company-specific risk be diversified away by investing in both Bell Food and Carnival PLC 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 Carnival PLC 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 Carnival PLC, you can compare the effects of market volatilities on Bell Food and Carnival PLC 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 Carnival PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Carnival PLC.
Diversification Opportunities for Bell Food and Carnival PLC
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bell and Carnival is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Carnival PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival PLC 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 Carnival PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival PLC has no effect on the direction of Bell Food i.e., Bell Food and Carnival PLC go up and down completely randomly.
Pair Corralation between Bell Food and Carnival PLC
Assuming the 90 days trading horizon Bell Food is expected to generate 39.12 times less return on investment than Carnival PLC. But when comparing it to its historical volatility, Bell Food Group is 2.63 times less risky than Carnival PLC. It trades about 0.01 of its potential returns per unit of risk. Carnival PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 87,180 in Carnival PLC on August 27, 2024 and sell it today you would earn a total of 91,670 from holding Carnival PLC or generate 105.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.67% |
| Values | Daily Returns |
Bell Food Group vs. Carnival PLC
Performance |
| Timeline |
| Bell Food Group |
| Carnival PLC |
Bell Food and Carnival PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Carnival PLC
The main advantage of trading using opposite Bell Food and Carnival PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Carnival PLC 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 Carnival PLC will offset losses from the drop in Carnival PLC's long position.| Bell Food vs. Samsung Electronics Co | Bell Food vs. Samsung Electronics Co | Bell Food vs. Hyundai Motor | Bell Food vs. Toyota Motor Corp |
| Carnival PLC vs. Austevoll Seafood ASA | Carnival PLC vs. CVS Health Corp | Carnival PLC vs. Omega Healthcare Investors | Carnival PLC vs. Leroy Seafood 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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