Correlation Between Food Life and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Food Life and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on Food Life and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and BRIT AMER.
Diversification Opportunities for Food Life and BRIT AMER
Weak diversification
The 3 months correlation between Food and BRIT is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Food Life i.e., Food Life and BRIT AMER go up and down completely randomly.
Pair Corralation between Food Life and BRIT AMER
Assuming the 90 days horizon Food Life Companies is expected to generate 1.47 times more return on investment than BRIT AMER. However, Food Life is 1.47 times more volatile than BRIT AMER TOBACCO. It trades about 0.43 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.38 per unit of risk. If you would invest 1,780 in Food Life Companies on September 3, 2024 and sell it today you would earn a total of 360.00 from holding Food Life Companies or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Food Life Companies |
| BRIT AMER TOBACCO |
Food Life and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and BRIT AMER
The main advantage of trading using opposite Food Life and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Food Life vs. McDonalds | Food Life vs. Chipotle Mexican Grill | Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings |
| BRIT AMER vs. FEMALE HEALTH | BRIT AMER vs. PARKEN Sport Entertainment | BRIT AMER vs. Amkor Technology | BRIT AMER vs. CVS Health |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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