Correlation Between Collins Foods and Event Hospitality
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Event Hospitality 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 Event Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Event Hospitality and, you can compare the effects of market volatilities on Collins Foods and Event Hospitality 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 Event Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Event Hospitality.
Diversification Opportunities for Collins Foods and Event Hospitality
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Event is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Collins Foods i.e., Collins Foods and Event Hospitality go up and down completely randomly.
Pair Corralation between Collins Foods and Event Hospitality
Assuming the 90 days trading horizon Collins Foods is expected to generate 1.22 times more return on investment than Event Hospitality. However, Collins Foods is 1.22 times more volatile than Event Hospitality and. It trades about 0.03 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.0 per unit of risk. If you would invest 695.00 in Collins Foods on August 29, 2024 and sell it today you would earn a total of 159.00 from holding Collins Foods or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Event Hospitality and
Performance |
| Timeline |
| Collins Foods |
| Event Hospitality |
Collins Foods and Event Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Event Hospitality
The main advantage of trading using opposite Collins Foods and Event Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Event Hospitality 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 Event Hospitality will offset losses from the drop in Event Hospitality's long position.| Collins Foods vs. Summit Resources Limited | Collins Foods vs. Champion Iron | Collins Foods vs. Ridley | Collins Foods vs. Peel Mining |
| Event Hospitality vs. PVW Resources | Event Hospitality vs. Woolworths | Event Hospitality vs. Wesfarmers | Event Hospitality vs. Coles Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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