Correlation Between Food Life and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both Food Life and Beyond Meat 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 Food Life and Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and Beyond Meat, you can compare the effects of market volatilities on Food Life and Beyond Meat 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 Food Life with a short position of Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Beyond Meat.
Diversification Opportunities for Food Life and Beyond Meat
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Food and Beyond is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and Food Life 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 Food Life Companies are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Food Life i.e., Food Life and Beyond Meat go up and down completely randomly.
Pair Corralation between Food Life and Beyond Meat
Assuming the 90 days horizon Food Life Companies is expected to generate 0.44 times more return on investment than Beyond Meat. However, Food Life Companies is 2.28 times less risky than Beyond Meat. It trades about 0.02 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.02 per unit of risk. If you would invest 2,060 in Food Life Companies on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Food Life Companies or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. Beyond Meat
Performance |
| Timeline |
| Food Life Companies |
| Beyond Meat |
Food Life and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Beyond Meat
The main advantage of trading using opposite Food Life and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.| Food Life vs. McDonalds | Food Life vs. Starbucks | Food Life vs. Compass Group PLC | Food Life vs. Yum Brands |
| Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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