Correlation Between Collins Foods and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Ecofibre 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 Collins Foods and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Ecofibre, you can compare the effects of market volatilities on Collins Foods and Ecofibre 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 Collins Foods with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Ecofibre.
Diversification Opportunities for Collins Foods and Ecofibre
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Ecofibre is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Collins Foods 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 Collins Foods are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Collins Foods i.e., Collins Foods and Ecofibre go up and down completely randomly.
Pair Corralation between Collins Foods and Ecofibre
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.26 times more return on investment than Ecofibre. However, Collins Foods is 3.78 times less risky than Ecofibre. It trades about 0.0 of its potential returns per unit of risk. Ecofibre is currently generating about -0.02 per unit of risk. If you would invest 786.00 in Collins Foods on October 26, 2024 and sell it today you would lose (68.00) from holding Collins Foods or give up 8.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Ecofibre
Performance |
| Timeline |
| Collins Foods |
| Ecofibre |
Collins Foods and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Ecofibre
The main advantage of trading using opposite Collins Foods and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Collins Foods vs. Event Hospitality and | Collins Foods vs. Retail Food Group | Collins Foods vs. Bluescope Steel | Collins Foods vs. Iron Road |
| Ecofibre vs. ACDC Metals | Ecofibre vs. Aurelia Metals | Ecofibre vs. Black Rock Mining | Ecofibre vs. Aristocrat Leisure |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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