Correlation Between Bunzl Plc and Innovative Food
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc and Innovative 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 Bunzl Plc and Innovative Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and Innovative Food Hldg, you can compare the effects of market volatilities on Bunzl Plc and Innovative 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 Bunzl Plc with a short position of Innovative Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Innovative Food.
Diversification Opportunities for Bunzl Plc and Innovative Food
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bunzl and Innovative is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Innovative Food Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Food Hldg and Bunzl Plc 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 Bunzl plc are associated (or correlated) with Innovative Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Food Hldg has no effect on the direction of Bunzl Plc i.e., Bunzl Plc and Innovative Food go up and down completely randomly.
Pair Corralation between Bunzl Plc and Innovative Food
Assuming the 90 days horizon Bunzl Plc is expected to generate 8.74 times less return on investment than Innovative Food. But when comparing it to its historical volatility, Bunzl plc is 3.89 times less risky than Innovative Food. It trades about 0.04 of its potential returns per unit of risk. Innovative Food Hldg is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Innovative Food Hldg on November 2, 2024 and sell it today you would earn a total of 165.00 from holding Innovative Food Hldg or generate 445.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bunzl plc vs. Innovative Food Hldg
Performance |
| Timeline |
| Bunzl plc |
| Innovative Food Hldg |
Bunzl Plc and Innovative Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and Innovative Food
The main advantage of trading using opposite Bunzl Plc and Innovative Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc position performs unexpectedly, Innovative 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 Innovative Food will offset losses from the drop in Innovative Food's long position.| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
| Innovative Food vs. Organto Foods | Innovative Food vs. Colabor Group | Innovative Food vs. Bunzl plc | Innovative Food vs. Hf Foods Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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