Correlation Between Central Garden and Steakholder Foods
Can any of the company-specific risk be diversified away by investing in both Central Garden and Steakholder 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 Central Garden and Steakholder Foods 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 Steakholder Foods, you can compare the effects of market volatilities on Central Garden and Steakholder 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 Central Garden with a short position of Steakholder Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Steakholder Foods.
Diversification Opportunities for Central Garden and Steakholder Foods
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Steakholder is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder Foods 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of Central Garden i.e., Central Garden and Steakholder Foods go up and down completely randomly.
Pair Corralation between Central Garden and Steakholder Foods
Given the investment horizon of 90 days Central Garden Pet is expected to generate 0.5 times more return on investment than Steakholder Foods. However, Central Garden Pet is 2.02 times less risky than Steakholder Foods. It trades about 0.4 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.28 per unit of risk. If you would invest 3,517 in Central Garden Pet on September 3, 2024 and sell it today you would earn a total of 458.00 from holding Central Garden Pet or generate 13.02% 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. Steakholder Foods
Performance |
| Timeline |
| Central Garden Pet |
| Steakholder Foods |
Central Garden and Steakholder Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Steakholder Foods
The main advantage of trading using opposite Central Garden and Steakholder Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Steakholder 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 Steakholder Foods will offset losses from the drop in Steakholder Foods' 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 |
| Steakholder Foods vs. Seneca Foods Corp | Steakholder Foods vs. J J Snack | Steakholder Foods vs. Central Garden Pet | Steakholder Foods vs. Central Garden Pet |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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