Correlation Between Food Life and CARGOJET INC
Can any of the company-specific risk be diversified away by investing in both Food Life and CARGOJET INC 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 CARGOJET INC 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 CARGOJET INC VAR, you can compare the effects of market volatilities on Food Life and CARGOJET INC 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 CARGOJET INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and CARGOJET INC.
Diversification Opportunities for Food Life and CARGOJET INC
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Food and CARGOJET is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and CARGOJET INC VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARGOJET INC VAR 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 CARGOJET INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARGOJET INC VAR has no effect on the direction of Food Life i.e., Food Life and CARGOJET INC go up and down completely randomly.
Pair Corralation between Food Life and CARGOJET INC
Assuming the 90 days horizon Food Life Companies is expected to generate 1.41 times more return on investment than CARGOJET INC. However, Food Life is 1.41 times more volatile than CARGOJET INC VAR. It trades about 0.39 of its potential returns per unit of risk. CARGOJET INC VAR is currently generating about -0.65 per unit of risk. If you would invest 1,890 in Food Life Companies on September 13, 2024 and sell it today you would earn a total of 310.00 from holding Food Life Companies or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. CARGOJET INC VAR
Performance |
| Timeline |
| Food Life Companies |
| CARGOJET INC VAR |
Food Life and CARGOJET INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and CARGOJET INC
The main advantage of trading using opposite Food Life and CARGOJET INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, CARGOJET INC 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 CARGOJET INC will offset losses from the drop in CARGOJET INC's long position.| Food Life vs. Starbucks | Food Life vs. Superior Plus Corp | Food Life vs. SIVERS SEMICONDUCTORS AB | Food Life vs. NorAm Drilling AS |
| CARGOJET INC vs. Lifeway Foods | CARGOJET INC vs. Austevoll Seafood ASA | CARGOJET INC vs. CN MODERN DAIRY | CARGOJET INC vs. Food Life Companies |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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