Correlation Between Collins Foods and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Kip McGrath 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 Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Kip McGrath Education, you can compare the effects of market volatilities on Collins Foods and Kip McGrath 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 Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Kip McGrath.
Diversification Opportunities for Collins Foods and Kip McGrath
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Collins and Kip is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Collins Foods i.e., Collins Foods and Kip McGrath go up and down completely randomly.
Pair Corralation between Collins Foods and Kip McGrath
Assuming the 90 days trading horizon Collins Foods is expected to generate 2.31 times less return on investment than Kip McGrath. But when comparing it to its historical volatility, Collins Foods is 1.92 times less risky than Kip McGrath. It trades about 0.02 of its potential returns per unit of risk. Kip McGrath Education is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Kip McGrath Education on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Kip McGrath Education or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Collins Foods vs. Kip McGrath Education
Performance |
| Timeline |
| Collins Foods |
| Kip McGrath Education |
Collins Foods and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Kip McGrath
The main advantage of trading using opposite Collins Foods and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Unibail Rodamco Westfield SE | Collins Foods vs. Macquarie Group | Collins Foods vs. Commonwealth Bank |
| Kip McGrath vs. Aneka Tambang Tbk | Kip McGrath vs. Unibail Rodamco Westfield SE | Kip McGrath vs. Macquarie Group | Kip McGrath vs. Commonwealth Bank |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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