Correlation Between Associated British and Simply Good
Can any of the company-specific risk be diversified away by investing in both Associated British and Simply Good 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 Simply Good 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 Simply Good Foods, you can compare the effects of market volatilities on Associated British and Simply Good 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 Simply Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Simply Good.
Diversification Opportunities for Associated British and Simply Good
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Associated and Simply is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Associated British i.e., Associated British and Simply Good go up and down completely randomly.
Pair Corralation between Associated British and Simply Good
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Simply Good. But the pink sheet apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.9 times less risky than Simply Good. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Simply Good Foods is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,901 in Simply Good Foods on November 3, 2024 and sell it today you would lose (101.00) from holding Simply Good Foods or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Simply Good Foods
Performance |
| Timeline |
| Associated British Foods |
| Simply Good Foods |
Associated British and Simply Good Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Simply Good
The main advantage of trading using opposite Associated British and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.| Associated British vs. Darling Ingredients | Associated British vs. JM Smucker | Associated British vs. McCormick Company Incorporated | Associated British vs. Campbell Soup |
| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
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.
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