Correlation Between Consumer Services and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Consumer Services and Consumer Staples 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 Consumer Services and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Services Ultrasector and Consumer Staples Portfolio, you can compare the effects of market volatilities on Consumer Services and Consumer Staples 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 Consumer Services with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Services and Consumer Staples.
Diversification Opportunities for Consumer Services and Consumer Staples
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consumer and Consumer is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Consumer Services 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 Consumer Services Ultrasector are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Consumer Services i.e., Consumer Services and Consumer Staples go up and down completely randomly.
Pair Corralation between Consumer Services and Consumer Staples
Assuming the 90 days horizon Consumer Services Ultrasector is expected to generate 1.72 times more return on investment than Consumer Staples. However, Consumer Services is 1.72 times more volatile than Consumer Staples Portfolio. It trades about -0.07 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.41 per unit of risk. If you would invest 7,850 in Consumer Services Ultrasector on October 9, 2024 and sell it today you would lose (280.00) from holding Consumer Services Ultrasector or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Services Ultrasector vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Consumer Services |
| Consumer Staples Por |
Consumer Services and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Services and Consumer Staples
The main advantage of trading using opposite Consumer Services and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Services position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Consumer Services vs. Transamerica High Yield | Consumer Services vs. Inverse High Yield | Consumer Services vs. Virtus High Yield | Consumer Services vs. Janus High Yield Fund |
| Consumer Staples vs. Kellanova | Consumer Staples vs. Bunge Limited | Consumer Staples vs. BJs Wholesale Club | Consumer Staples vs. Colgate Palmolive |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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