Correlation Between Farm Pride and Toys R
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Toys R 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 Toys R 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 Toys R Us, you can compare the effects of market volatilities on Farm Pride and Toys R 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 Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Toys R.
Diversification Opportunities for Farm Pride and Toys R
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farm and Toys is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us 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 Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of Farm Pride i.e., Farm Pride and Toys R go up and down completely randomly.
Pair Corralation between Farm Pride and Toys R
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 0.97 times more return on investment than Toys R. However, Farm Pride Foods is 1.03 times less risky than Toys R. It trades about -0.05 of its potential returns per unit of risk. Toys R Us is currently generating about -0.1 per unit of risk. If you would invest 13.00 in Farm Pride Foods on September 13, 2024 and sell it today you would lose (1.00) from holding Farm Pride Foods or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Toys R Us
Performance |
| Timeline |
| Farm Pride Foods |
| Toys R Us |
Farm Pride and Toys R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Toys R
The main advantage of trading using opposite Farm Pride and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R's long position.| Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
| Toys R vs. Insignia Financial | Toys R vs. MA Financial Group | Toys R vs. Ras Technology Holdings | Toys R vs. Credit Clear |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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