Correlation Between Central Garden and Blue Star
Can any of the company-specific risk be diversified away by investing in both Central Garden and Blue Star 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 Blue Star 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 Blue Star Foods, you can compare the effects of market volatilities on Central Garden and Blue Star 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 Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Blue Star.
Diversification Opportunities for Central Garden and Blue Star
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Blue is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Blue Star Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star 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 Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Foods has no effect on the direction of Central Garden i.e., Central Garden and Blue Star go up and down completely randomly.
Pair Corralation between Central Garden and Blue Star
Assuming the 90 days horizon Central Garden Pet is expected to generate 0.26 times more return on investment than Blue Star. However, Central Garden Pet is 3.85 times less risky than Blue Star. It trades about 0.36 of its potential returns per unit of risk. Blue Star Foods is currently generating about -0.39 per unit of risk. If you would invest 2,951 in Central Garden Pet on August 27, 2024 and sell it today you would earn a total of 367.00 from holding Central Garden Pet or generate 12.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Blue Star Foods
Performance |
| Timeline |
| Central Garden Pet |
| Blue Star Foods |
Central Garden and Blue Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Blue Star
The main advantage of trading using opposite Central Garden and Blue Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Blue Star 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 Blue Star will offset losses from the drop in Blue Star's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
| Blue Star vs. Better Choice | Blue Star vs. Stryve Foods | Blue Star vs. BioAdaptives | Blue Star vs. Beyond Oil |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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