Correlation Between Consolidated Communications and RETAIL FOOD
Can any of the company-specific risk be diversified away by investing in both Consolidated Communications and RETAIL 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 Consolidated Communications and RETAIL FOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Communications Holdings and RETAIL FOOD GROUP, you can compare the effects of market volatilities on Consolidated Communications and RETAIL 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 Consolidated Communications with a short position of RETAIL FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and RETAIL FOOD.
Diversification Opportunities for Consolidated Communications and RETAIL FOOD
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consolidated and RETAIL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP and Consolidated Communications 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 Consolidated Communications Holdings are associated (or correlated) with RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of Consolidated Communications i.e., Consolidated Communications and RETAIL FOOD go up and down completely randomly.
Pair Corralation between Consolidated Communications and RETAIL FOOD
Assuming the 90 days horizon Consolidated Communications is expected to generate 3.52 times less return on investment than RETAIL FOOD. But when comparing it to its historical volatility, Consolidated Communications Holdings is 2.5 times less risky than RETAIL FOOD. It trades about 0.18 of its potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3.70 in RETAIL FOOD GROUP on August 28, 2024 and sell it today you would earn a total of 0.50 from holding RETAIL FOOD GROUP or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Communications Ho vs. RETAIL FOOD GROUP
Performance |
| Timeline |
| Consolidated Communications |
| RETAIL FOOD GROUP |
Consolidated Communications and RETAIL FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and RETAIL FOOD
The main advantage of trading using opposite Consolidated Communications and RETAIL FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications position performs unexpectedly, RETAIL 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 RETAIL FOOD will offset losses from the drop in RETAIL FOOD's long position.| Consolidated Communications vs. Harmony Gold Mining | Consolidated Communications vs. USWE SPORTS AB | Consolidated Communications vs. SPORT LISBOA E | Consolidated Communications vs. Columbia Sportswear |
| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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