Correlation Between Central Garden and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both Central Garden and Campbell Soup 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 Campbell Soup 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 Campbell Soup, you can compare the effects of market volatilities on Central Garden and Campbell Soup 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 Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Campbell Soup.
Diversification Opportunities for Central Garden and Campbell Soup
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Campbell is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup 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 Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of Central Garden i.e., Central Garden and Campbell Soup go up and down completely randomly.
Pair Corralation between Central Garden and Campbell Soup
Assuming the 90 days horizon Central Garden Pet is expected to under-perform the Campbell Soup. In addition to that, Central Garden is 1.33 times more volatile than Campbell Soup. It trades about -0.05 of its total potential returns per unit of risk. Campbell Soup is currently generating about 0.04 per unit of volatility. If you would invest 4,323 in Campbell Soup on August 28, 2024 and sell it today you would earn a total of 270.00 from holding Campbell Soup or generate 6.25% 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. Campbell Soup
Performance |
| Timeline |
| Central Garden Pet |
| Campbell Soup |
Central Garden and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Campbell Soup
The main advantage of trading using opposite Central Garden and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup'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 |
| Campbell Soup vs. Bellring Brands LLC | Campbell Soup vs. Ingredion Incorporated | Campbell Soup vs. Nomad Foods | Campbell Soup vs. Simply Good 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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