Correlation Between Associated British and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Associated British and Hilton Food 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 Associated British and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Hilton Food Group, you can compare the effects of market volatilities on Associated British and Hilton Food 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 Associated British with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Hilton Food.
Diversification Opportunities for Associated British and Hilton Food
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Associated and Hilton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and Associated British 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 Associated British Foods are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Associated British i.e., Associated British and Hilton Food go up and down completely randomly.
Pair Corralation between Associated British and Hilton Food
Assuming the 90 days trading horizon Associated British is expected to generate 2.11 times less return on investment than Hilton Food. But when comparing it to its historical volatility, Associated British Foods is 1.24 times less risky than Hilton Food. It trades about 0.05 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 51,530 in Hilton Food Group on August 31, 2024 and sell it today you would earn a total of 39,670 from holding Hilton Food Group or generate 76.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Hilton Food Group
Performance |
| Timeline |
| Associated British Foods |
| Hilton Food Group |
Associated British and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Hilton Food
The main advantage of trading using opposite Associated British and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Associated British vs. Aeorema Communications Plc | Associated British vs. British American Tobacco | Associated British vs. Induction Healthcare Group | Associated British vs. Optima Health plc |
| Hilton Food vs. Impax Environmental Markets | Hilton Food vs. Veolia Environnement VE | Hilton Food vs. United States Steel | Hilton Food vs. Ecclesiastical Insurance Office |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |