Correlation Between Brent Crude and Hanover Foods
Can any of the company-specific risk be diversified away by investing in both Brent Crude and Hanover 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 Brent Crude and Hanover Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brent Crude Oil and Hanover Foods, you can compare the effects of market volatilities on Brent Crude and Hanover 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 Brent Crude with a short position of Hanover Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brent Crude and Hanover Foods.
Diversification Opportunities for Brent Crude and Hanover Foods
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brent and Hanover is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Brent Crude Oil and Hanover Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Foods and Brent Crude 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 Brent Crude Oil are associated (or correlated) with Hanover Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Foods has no effect on the direction of Brent Crude i.e., Brent Crude and Hanover Foods go up and down completely randomly.
Pair Corralation between Brent Crude and Hanover Foods
Assuming the 90 days horizon Brent Crude Oil is expected to generate 1.45 times more return on investment than Hanover Foods. However, Brent Crude is 1.45 times more volatile than Hanover Foods. It trades about 0.02 of its potential returns per unit of risk. Hanover Foods is currently generating about -0.05 per unit of risk. If you would invest 7,375 in Brent Crude Oil on November 2, 2024 and sell it today you would earn a total of 214.00 from holding Brent Crude Oil or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.26% |
| Values | Daily Returns |
Brent Crude Oil vs. Hanover Foods
Performance |
| Timeline |
| Brent Crude Oil |
| Hanover Foods |
Brent Crude and Hanover Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brent Crude and Hanover Foods
The main advantage of trading using opposite Brent Crude and Hanover Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brent Crude position performs unexpectedly, Hanover 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 Hanover Foods will offset losses from the drop in Hanover Foods' long position.| Brent Crude vs. Natural Gas | Brent Crude vs. Lean Hogs Futures | Brent Crude vs. Live Cattle Futures | Brent Crude vs. Lumber Futures |
| Hanover Foods vs. Edible Garden AG | Hanover Foods vs. Golden Agri Resources | Hanover Foods vs. Local Bounti Corp | Hanover Foods vs. Village Farms International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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