Correlation Between Central Garden and A2 Milk
Can any of the company-specific risk be diversified away by investing in both Central Garden and A2 Milk 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 Central Garden and A2 Milk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and The A2 Milk, you can compare the effects of market volatilities on Central Garden and A2 Milk 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 Central Garden with a short position of A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and A2 Milk.
Diversification Opportunities for Central Garden and A2 Milk
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and ACOPY is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and The A2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2 Milk and Central Garden 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 Central Garden Pet are associated (or correlated) with A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2 Milk has no effect on the direction of Central Garden i.e., Central Garden and A2 Milk go up and down completely randomly.
Pair Corralation between Central Garden and A2 Milk
Given the investment horizon of 90 days Central Garden Pet is expected to generate 0.72 times more return on investment than A2 Milk. However, Central Garden Pet is 1.38 times less risky than A2 Milk. It trades about 0.03 of its potential returns per unit of risk. The A2 Milk is currently generating about 0.0 per unit of risk. If you would invest 3,043 in Central Garden Pet on August 28, 2024 and sell it today you would earn a total of 838.00 from holding Central Garden Pet or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. The A2 Milk
Performance |
| Timeline |
| Central Garden Pet |
| A2 Milk |
Central Garden and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and A2 Milk
The main advantage of trading using opposite Central Garden and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. McCormick Company Incorporated | Central Garden vs. Natures Sunshine Products | Central Garden vs. Seneca Foods Corp |
| A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. Aryzta AG PK | A2 Milk vs. Artisan Consumer Goods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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