Correlation Between Apple and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Apple and Nomad Foods 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 Apple and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Nomad Foods, you can compare the effects of market volatilities on Apple and Nomad Foods 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 Apple with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Nomad Foods.
Diversification Opportunities for Apple and Nomad Foods
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Nomad is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Apple 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 Apple Inc are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Apple i.e., Apple and Nomad Foods go up and down completely randomly.
Pair Corralation between Apple and Nomad Foods
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Nomad Foods. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.12 times less risky than Nomad Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Nomad Foods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,580 in Nomad Foods on November 3, 2024 and sell it today you would earn a total of 120.00 from holding Nomad Foods or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Nomad Foods
Performance |
| Timeline |
| Apple Inc |
| Nomad Foods |
Apple and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Nomad Foods
The main advantage of trading using opposite Apple and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Apple vs. Arrow Electronics | Apple vs. Meiko Electronics Co | Apple vs. DENTSPLY SIRONA | Apple vs. KOBE STEEL LTD |
| Nomad Foods vs. AGRICULTBK HADR25 YC | Nomad Foods vs. SIERRA METALS | Nomad Foods vs. Dairy Farm International | Nomad Foods vs. DAIDO METAL TD |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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