Correlation Between Standard Foods and Eagle Cold
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Eagle Cold 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 Standard Foods and Eagle Cold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Eagle Cold Storage, you can compare the effects of market volatilities on Standard Foods and Eagle Cold 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 Standard Foods with a short position of Eagle Cold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Eagle Cold.
Diversification Opportunities for Standard Foods and Eagle Cold
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Standard and Eagle is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Standard Foods i.e., Standard Foods and Eagle Cold go up and down completely randomly.
Pair Corralation between Standard Foods and Eagle Cold
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Eagle Cold. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 1.44 times less risky than Eagle Cold. The stock trades about -0.04 of its potential returns per unit of risk. The Eagle Cold Storage is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,111 in Eagle Cold Storage on October 24, 2024 and sell it today you would earn a total of 1,049 from holding Eagle Cold Storage or generate 49.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Eagle Cold Storage
Performance |
| Timeline |
| Standard Foods Corp |
| Eagle Cold Storage |
Standard Foods and Eagle Cold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Eagle Cold
The main advantage of trading using opposite Standard Foods and Eagle Cold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Eagle Cold 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 Eagle Cold will offset losses from the drop in Eagle Cold's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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