Correlation Between ConAgra Foods and Alico
Can any of the company-specific risk be diversified away by investing in both ConAgra Foods and Alico 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 ConAgra Foods and Alico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Alico Inc, you can compare the effects of market volatilities on ConAgra Foods and Alico 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 ConAgra Foods with a short position of Alico. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Alico.
Diversification Opportunities for ConAgra Foods and Alico
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConAgra and Alico is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and ConAgra Foods 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 ConAgra Foods are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Alico go up and down completely randomly.
Pair Corralation between ConAgra Foods and Alico
Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Alico. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 1.9 times less risky than Alico. The stock trades about -0.2 of its potential returns per unit of risk. The Alico Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,451 in Alico Inc on September 1, 2024 and sell it today you would earn a total of 229.00 from holding Alico Inc or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConAgra Foods vs. Alico Inc
Performance |
| Timeline |
| ConAgra Foods |
| Alico Inc |
ConAgra Foods and Alico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConAgra Foods and Alico
The main advantage of trading using opposite ConAgra Foods and Alico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods position performs unexpectedly, Alico 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 Alico will offset losses from the drop in Alico's long position.| ConAgra Foods vs. Kellanova | ConAgra Foods vs. General Mills | ConAgra Foods vs. JM Smucker | ConAgra Foods vs. Hormel Foods |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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