Correlation Between Dairy Farm and Covivio SA
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Covivio SA 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 Dairy Farm and Covivio SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Covivio SA, you can compare the effects of market volatilities on Dairy Farm and Covivio SA 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 Dairy Farm with a short position of Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Covivio SA.
Diversification Opportunities for Dairy Farm and Covivio SA
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Covivio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA and Dairy Farm 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 Dairy Farm International are associated (or correlated) with Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of Dairy Farm i.e., Dairy Farm and Covivio SA go up and down completely randomly.
Pair Corralation between Dairy Farm and Covivio SA
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 1.28 times more return on investment than Covivio SA. However, Dairy Farm is 1.28 times more volatile than Covivio SA. It trades about 0.17 of its potential returns per unit of risk. Covivio SA is currently generating about -0.09 per unit of risk. If you would invest 214.00 in Dairy Farm International on September 4, 2024 and sell it today you would earn a total of 14.00 from holding Dairy Farm International or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dairy Farm International vs. Covivio SA
Performance |
| Timeline |
| Dairy Farm International |
| Covivio SA |
Dairy Farm and Covivio SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Covivio SA
The main advantage of trading using opposite Dairy Farm and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Covivio SA 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 Covivio SA will offset losses from the drop in Covivio SA's long position.| Dairy Farm vs. Seven i Holdings | Dairy Farm vs. AHOLD DELHAIADR16 EO 25 | Dairy Farm vs. Loblaw Companies Limited | Dairy Farm vs. TESCO PLC LS 0633333 |
| Covivio SA vs. Transportadora de Gas | Covivio SA vs. CosmoSteel Holdings Limited | Covivio SA vs. Liberty Broadband | Covivio SA vs. Tianjin Capital Environmental |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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