Correlation Between Bell Food and Northern Bear
Can any of the company-specific risk be diversified away by investing in both Bell Food and Northern Bear 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 Northern Bear 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 Northern Bear Plc, you can compare the effects of market volatilities on Bell Food and Northern Bear 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 Northern Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Northern Bear.
Diversification Opportunities for Bell Food and Northern Bear
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bell and Northern is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Northern Bear Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Bear 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 Northern Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Bear Plc has no effect on the direction of Bell Food i.e., Bell Food and Northern Bear go up and down completely randomly.
Pair Corralation between Bell Food and Northern Bear
Assuming the 90 days trading horizon Bell Food Group is expected to under-perform the Northern Bear. But the stock apears to be less risky and, when comparing its historical volatility, Bell Food Group is 2.38 times less risky than Northern Bear. The stock trades about -0.03 of its potential returns per unit of risk. The Northern Bear Plc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,200 in Northern Bear Plc on September 22, 2024 and sell it today you would earn a total of 350.00 from holding Northern Bear Plc or generate 6.73% 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. Northern Bear Plc
Performance |
| Timeline |
| Bell Food Group |
| Northern Bear Plc |
Bell Food and Northern Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Northern Bear
The main advantage of trading using opposite Bell Food and Northern Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Northern Bear 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 Northern Bear will offset losses from the drop in Northern Bear's long position.| Bell Food vs. Samsung Electronics Co | Bell Food vs. Samsung Electronics Co | Bell Food vs. Hyundai Motor | Bell Food vs. Reliance Industries Ltd |
| Northern Bear vs. Hyundai Motor | Northern Bear vs. Toyota Motor Corp | Northern Bear vs. SoftBank Group Corp | Northern Bear vs. Halyk Bank of |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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