Correlation Between Bell Food and LBG Media
Can any of the company-specific risk be diversified away by investing in both Bell Food and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Bell Food and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and LBG Media.
Diversification Opportunities for Bell Food and LBG Media
Significant diversification
The 3 months correlation between Bell and LBG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Bell Food i.e., Bell Food and LBG Media go up and down completely randomly.
Pair Corralation between Bell Food and LBG Media
Assuming the 90 days trading horizon Bell Food is expected to generate 4.65 times less return on investment than LBG Media. But when comparing it to its historical volatility, Bell Food Group is 2.42 times less risky than LBG Media. It trades about 0.06 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,400 in LBG Media PLC on October 14, 2024 and sell it today you would earn a total of 650.00 from holding LBG Media PLC or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Food Group vs. LBG Media PLC
Performance |
| Timeline |
| Bell Food Group |
| LBG Media PLC |
Bell Food and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and LBG Media
The main advantage of trading using opposite Bell Food and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Bell Food vs. Westlake Chemical Corp | Bell Food vs. Air Products Chemicals | Bell Food vs. Porvair plc | Bell Food vs. Fair Oaks Income |
| LBG Media vs. Coor Service Management | LBG Media vs. Tatton Asset Management | LBG Media vs. Bell Food Group | LBG Media vs. Tyson Foods Cl |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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