Correlation Between AEON STORES and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both AEON STORES 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 AEON STORES and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and Nomad Foods, you can compare the effects of market volatilities on AEON STORES 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 AEON STORES with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and Nomad Foods.
Diversification Opportunities for AEON STORES and Nomad Foods
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AEON and Nomad is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and AEON STORES 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 AEON STORES 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 AEON STORES i.e., AEON STORES and Nomad Foods go up and down completely randomly.
Pair Corralation between AEON STORES and Nomad Foods
If you would invest 1,600 in Nomad Foods on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Nomad Foods or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AEON STORES vs. Nomad Foods
Performance |
| Timeline |
| AEON STORES |
| Nomad Foods |
AEON STORES and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and Nomad Foods
The main advantage of trading using opposite AEON STORES and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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.| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
| Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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