Correlation Between Collins Foods and Metro AG
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Metro AG 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 Collins Foods and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Metro AG, you can compare the effects of market volatilities on Collins Foods and Metro AG 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 Collins Foods with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Metro AG.
Diversification Opportunities for Collins Foods and Metro AG
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Collins and Metro is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Collins Foods 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 Collins Foods Limited are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Collins Foods i.e., Collins Foods and Metro AG go up and down completely randomly.
Pair Corralation between Collins Foods and Metro AG
Assuming the 90 days horizon Collins Foods Limited is expected to generate 0.66 times more return on investment than Metro AG. However, Collins Foods Limited is 1.51 times less risky than Metro AG. It trades about 0.03 of its potential returns per unit of risk. Metro AG is currently generating about -0.01 per unit of risk. If you would invest 435.00 in Collins Foods Limited on September 5, 2024 and sell it today you would earn a total of 75.00 from holding Collins Foods Limited or generate 17.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods Limited vs. Metro AG
Performance |
| Timeline |
| Collins Foods Limited |
| Metro AG |
Collins Foods and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Metro AG
The main advantage of trading using opposite Collins Foods and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Collins Foods vs. McDonalds | Collins Foods vs. Chipotle Mexican Grill | Collins Foods vs. Superior Plus Corp | Collins Foods vs. NMI Holdings |
| Metro AG vs. Performance Food Group | Metro AG vs. Superior Plus Corp | Metro AG vs. NMI Holdings | Metro AG vs. Origin Agritech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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