Correlation Between Edita Food and Next PLC
Can any of the company-specific risk be diversified away by investing in both Edita Food and Next PLC 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 Edita Food and Next PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Next PLC, you can compare the effects of market volatilities on Edita Food and Next PLC 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 Edita Food with a short position of Next PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Next PLC.
Diversification Opportunities for Edita Food and Next PLC
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Edita and Next is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Next PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next PLC and Edita Food 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 Edita Food Industries are associated (or correlated) with Next PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next PLC has no effect on the direction of Edita Food i.e., Edita Food and Next PLC go up and down completely randomly.
Pair Corralation between Edita Food and Next PLC
Assuming the 90 days trading horizon Edita Food Industries is expected to generate 0.43 times more return on investment than Next PLC. However, Edita Food Industries is 2.31 times less risky than Next PLC. It trades about 0.21 of its potential returns per unit of risk. Next PLC is currently generating about -0.01 per unit of risk. If you would invest 195.00 in Edita Food Industries on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Edita Food Industries or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edita Food Industries vs. Next PLC
Performance |
| Timeline |
| Edita Food Industries |
| Next PLC |
Edita Food and Next PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Next PLC
The main advantage of trading using opposite Edita Food and Next PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Next PLC 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 Next PLC will offset losses from the drop in Next PLC's long position.| Edita Food vs. Home Depot | Edita Food vs. Chrysalis Investments | Edita Food vs. Neometals | Edita Food vs. Coor Service Management |
| Next PLC vs. Liberty Media Corp | Next PLC vs. Atresmedia | Next PLC vs. L3Harris Technologies | Next PLC vs. Albion Technology General |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |