Correlation Between Flowers Foods and Borealis Foods
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Borealis 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 Flowers Foods and Borealis Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Borealis Foods, you can compare the effects of market volatilities on Flowers Foods and Borealis 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 Flowers Foods with a short position of Borealis Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Borealis Foods.
Diversification Opportunities for Flowers Foods and Borealis Foods
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flowers and Borealis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Borealis Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Foods and Flowers Foods 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 Flowers Foods are associated (or correlated) with Borealis Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Foods has no effect on the direction of Flowers Foods i.e., Flowers Foods and Borealis Foods go up and down completely randomly.
Pair Corralation between Flowers Foods and Borealis Foods
Considering the 90-day investment horizon Flowers Foods is expected to under-perform the Borealis Foods. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 9.46 times less risky than Borealis Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Borealis Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.11 in Borealis Foods on September 2, 2024 and sell it today you would lose (0.11) from holding Borealis Foods or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 39.31% |
| Values | Daily Returns |
Flowers Foods vs. Borealis Foods
Performance |
| Timeline |
| Flowers Foods |
| Borealis Foods |
Flowers Foods and Borealis Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Borealis Foods
The main advantage of trading using opposite Flowers Foods and Borealis Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Borealis 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 Borealis Foods will offset losses from the drop in Borealis Foods' long position.| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
| Borealis Foods vs. Valneva SE ADR | Borealis Foods vs. Spyre Therapeutics | Borealis Foods vs. Lipocine | Borealis Foods vs. Akanda Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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