Correlation Between Edita Food and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Edita Food and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Edita Food and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Supermarket Income.
Diversification Opportunities for Edita Food and Supermarket Income
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edita and Supermarket is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Edita Food i.e., Edita Food and Supermarket Income go up and down completely randomly.
Pair Corralation between Edita Food and Supermarket Income
Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the Supermarket Income. In addition to that, Edita Food is 6.1 times more volatile than Supermarket Income REIT. It trades about -0.19 of its total potential returns per unit of risk. Supermarket Income REIT is currently generating about 0.06 per unit of volatility. If you would invest 7,050 in Supermarket Income REIT on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Supermarket Income REIT or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edita Food Industries vs. Supermarket Income REIT
Performance |
| Timeline |
| Edita Food Industries |
| Supermarket Income REIT |
Edita Food and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Supermarket Income
The main advantage of trading using opposite Edita Food and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Edita Food vs. Hong Kong Land | Edita Food vs. Ithaca Energy PLC | Edita Food vs. GRIT Real Estate | Edita Food vs. SANTANDER UK 10 |
| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Diversified Energy | Supermarket Income vs. Thyssenkrupp AG ON |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |