Correlation Between Food Life and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Food Life and ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips, you can compare the effects of market volatilities on Food Life and ConocoPhillips 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 ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and ConocoPhillips.
Diversification Opportunities for Food Life and ConocoPhillips
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Food and ConocoPhillips is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Food Life i.e., Food Life and ConocoPhillips go up and down completely randomly.
Pair Corralation between Food Life and ConocoPhillips
Assuming the 90 days horizon Food Life Companies is expected to generate 1.29 times more return on investment than ConocoPhillips. However, Food Life is 1.29 times more volatile than ConocoPhillips. It trades about 0.39 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.24 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. ConocoPhillips
Performance |
| Timeline |
| Food Life Companies |
| ConocoPhillips |
Food Life and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and ConocoPhillips
The main advantage of trading using opposite Food Life and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Food Life vs. Starbucks | Food Life vs. Superior Plus Corp | Food Life vs. SIVERS SEMICONDUCTORS AB | Food Life vs. NorAm Drilling AS |
| ConocoPhillips vs. TEXAS ROADHOUSE | ConocoPhillips vs. AM EAGLE OUTFITTERS | ConocoPhillips vs. ALERION CLEANPOWER | ConocoPhillips vs. Air Transport Services |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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