Correlation Between Bell Food and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Bell Food and Hilton Food 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 Hilton Food 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 Hilton Food Group, you can compare the effects of market volatilities on Bell Food and Hilton Food 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 Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Hilton Food.
Diversification Opportunities for Bell Food and Hilton Food
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bell and Hilton is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Bell Food i.e., Bell Food and Hilton Food go up and down completely randomly.
Pair Corralation between Bell Food and Hilton Food
Assuming the 90 days trading horizon Bell Food is expected to generate 6.74 times less return on investment than Hilton Food. But when comparing it to its historical volatility, Bell Food Group is 1.33 times less risky than Hilton Food. It trades about 0.01 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 79,074 in Hilton Food Group on August 25, 2024 and sell it today you would earn a total of 12,926 from holding Hilton Food Group or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.48% |
| Values | Daily Returns |
Bell Food Group vs. Hilton Food Group
Performance |
| Timeline |
| Bell Food Group |
| Hilton Food Group |
Bell Food and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Hilton Food
The main advantage of trading using opposite Bell Food and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food'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 |
| Hilton Food vs. Zanaga Iron Ore | Hilton Food vs. Axway Software SA | Hilton Food vs. Take Two Interactive Software | Hilton Food vs. JLEN Environmental Assets |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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