Correlation Between Collins Foods and Hudson Investment
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Hudson Investment 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 Hudson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Hudson Investment Group, you can compare the effects of market volatilities on Collins Foods and Hudson Investment 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 Hudson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Hudson Investment.
Diversification Opportunities for Collins Foods and Hudson Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Collins and Hudson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Hudson Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Investment 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 Hudson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Investment has no effect on the direction of Collins Foods i.e., Collins Foods and Hudson Investment go up and down completely randomly.
Pair Corralation between Collins Foods and Hudson Investment
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Hudson Investment. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 1.15 times less risky than Hudson Investment. The stock trades about -0.08 of its potential returns per unit of risk. The Hudson Investment Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Hudson Investment Group on September 14, 2024 and sell it today you would lose (3.00) from holding Hudson Investment Group or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Hudson Investment Group
Performance |
| Timeline |
| Collins Foods |
| Hudson Investment |
Collins Foods and Hudson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Hudson Investment
The main advantage of trading using opposite Collins Foods and Hudson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Hudson Investment 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 Hudson Investment will offset losses from the drop in Hudson Investment's long position.| Collins Foods vs. Tombador Iron | Collins Foods vs. Cleanaway Waste Management | Collins Foods vs. Farm Pride Foods | Collins Foods vs. RLF AgTech |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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