Correlation Between Cebu Air and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Beyond Meat 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 Cebu Air and Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Beyond Meat, you can compare the effects of market volatilities on Cebu Air and Beyond Meat 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 Cebu Air with a short position of Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Beyond Meat.
Diversification Opportunities for Cebu Air and Beyond Meat
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cebu and Beyond is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and Cebu Air 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 Cebu Air ADR are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Cebu Air i.e., Cebu Air and Beyond Meat go up and down completely randomly.
Pair Corralation between Cebu Air and Beyond Meat
Assuming the 90 days horizon Cebu Air ADR is expected to generate 0.67 times more return on investment than Beyond Meat. However, Cebu Air ADR is 1.49 times less risky than Beyond Meat. It trades about -0.22 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.19 per unit of risk. If you would invest 215.00 in Cebu Air ADR on September 3, 2024 and sell it today you would lose (30.00) from holding Cebu Air ADR or give up 13.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cebu Air ADR vs. Beyond Meat
Performance |
| Timeline |
| Cebu Air ADR |
| Beyond Meat |
Cebu Air and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Beyond Meat
The main advantage of trading using opposite Cebu Air and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| Beyond Meat vs. Kraft Heinz Co | Beyond Meat vs. Hormel Foods | Beyond Meat vs. Kellanova | Beyond Meat vs. General Mills |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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