Correlation Between Coffee Holding and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and Nomad Foods 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 Coffee Holding and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Nomad Foods, you can compare the effects of market volatilities on Coffee Holding and Nomad Foods 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 Coffee Holding with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Nomad Foods.
Diversification Opportunities for Coffee Holding and Nomad Foods
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coffee and Nomad is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Coffee Holding 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 Coffee Holding Co are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Coffee Holding i.e., Coffee Holding and Nomad Foods go up and down completely randomly.
Pair Corralation between Coffee Holding and Nomad Foods
Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the Nomad Foods. In addition to that, Coffee Holding is 3.82 times more volatile than Nomad Foods. It trades about -0.16 of its total potential returns per unit of risk. Nomad Foods is currently generating about -0.46 per unit of volatility. If you would invest 1,670 in Nomad Foods on October 14, 2024 and sell it today you would lose (160.00) from holding Nomad Foods or give up 9.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Nomad Foods
Performance |
| Timeline |
| Coffee Holding |
| Nomad Foods |
Coffee Holding and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Nomad Foods
The main advantage of trading using opposite Coffee Holding and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Coffee Holding vs. GWILLI FOOD | Coffee Holding vs. Richardson Electronics | Coffee Holding vs. Nomad Foods | Coffee Holding vs. Tyson Foods |
| Nomad Foods vs. National Beverage Corp | Nomad Foods vs. Tencent Music Entertainment | Nomad Foods vs. SENECA FOODS A | Nomad Foods vs. MTY Food 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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