Correlation Between Food Life and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Food Life and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Food Life and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Quaker Chemical.
Diversification Opportunities for Food Life and Quaker Chemical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Food and Quaker is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Food Life i.e., Food Life and Quaker Chemical go up and down completely randomly.
Pair Corralation between Food Life and Quaker Chemical
Assuming the 90 days horizon Food Life Companies is expected to generate 1.25 times more return on investment than Quaker Chemical. However, Food Life is 1.25 times more volatile than Quaker Chemical. It trades about 0.04 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 1,780 in Food Life Companies on August 31, 2024 and sell it today you would earn a total of 260.00 from holding Food Life Companies or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. Quaker Chemical
Performance |
| Timeline |
| Food Life Companies |
| Quaker Chemical |
Food Life and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Quaker Chemical
The main advantage of trading using opposite Food Life and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Food Life vs. McDonalds | Food Life vs. Starbucks | Food Life vs. Starbucks | Food Life vs. Compass Group PLC |
| Quaker Chemical vs. The Hanover Insurance | Quaker Chemical vs. Food Life Companies | Quaker Chemical vs. QBE Insurance Group | Quaker Chemical vs. Safety Insurance Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |