Correlation Between Farm Pride and British Amer
Can any of the company-specific risk be diversified away by investing in both Farm Pride and British Amer 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 Farm Pride and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Pride Foods and Bailador Technology Invest, you can compare the effects of market volatilities on Farm Pride and British Amer 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 Farm Pride with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and British Amer.
Diversification Opportunities for Farm Pride and British Amer
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Farm and British is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Bailador Technology Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bailador Technology and Farm Pride 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 Farm Pride Foods are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bailador Technology has no effect on the direction of Farm Pride i.e., Farm Pride and British Amer go up and down completely randomly.
Pair Corralation between Farm Pride and British Amer
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 7.7 times more return on investment than British Amer. However, Farm Pride is 7.7 times more volatile than Bailador Technology Invest. It trades about 0.14 of its potential returns per unit of risk. Bailador Technology Invest is currently generating about 0.21 per unit of risk. If you would invest 13.00 in Farm Pride Foods on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Farm Pride Foods or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Bailador Technology Invest
Performance |
| Timeline |
| Farm Pride Foods |
| Bailador Technology |
Farm Pride and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and British Amer
The main advantage of trading using opposite Farm Pride and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Farm Pride vs. Dicker Data | Farm Pride vs. Carlton Investments | Farm Pride vs. K2 Asset Management | Farm Pride vs. Clime Investment Management |
| British Amer vs. Insurance Australia Group | British Amer vs. Health and Plant | British Amer vs. Perpetual Credit Income | British Amer vs. Event Hospitality and |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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