Correlation Between Associated British and Calbee
Can any of the company-specific risk be diversified away by investing in both Associated British and Calbee 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 Calbee 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 Calbee Inc, you can compare the effects of market volatilities on Associated British and Calbee 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 Calbee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Calbee.
Diversification Opportunities for Associated British and Calbee
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Associated and Calbee is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc 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 Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Associated British i.e., Associated British and Calbee go up and down completely randomly.
Pair Corralation between Associated British and Calbee
Assuming the 90 days horizon Associated British Foods is expected to generate 0.32 times more return on investment than Calbee. However, Associated British Foods is 3.1 times less risky than Calbee. It trades about -0.14 of its potential returns per unit of risk. Calbee Inc is currently generating about -0.11 per unit of risk. If you would invest 3,092 in Associated British Foods on August 28, 2024 and sell it today you would lose (310.00) from holding Associated British Foods or give up 10.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Calbee Inc
Performance |
| Timeline |
| Associated British Foods |
| Calbee Inc |
Associated British and Calbee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Calbee
The main advantage of trading using opposite Associated British and Calbee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Calbee 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 Calbee will offset losses from the drop in Calbee's long position.| Associated British vs. Artisan Consumer Goods | Associated British vs. The A2 Milk | Associated British vs. General Mills |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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