Correlation Between Freshpet and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Freshpet and Nomad 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 Freshpet and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Nomad Foods, you can compare the effects of market volatilities on Freshpet and Nomad 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 Freshpet with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Nomad Foods.
Diversification Opportunities for Freshpet and Nomad Foods
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freshpet and Nomad is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Freshpet 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 Freshpet are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Freshpet i.e., Freshpet and Nomad Foods go up and down completely randomly.
Pair Corralation between Freshpet and Nomad Foods
Given the investment horizon of 90 days Freshpet is expected to generate 1.48 times more return on investment than Nomad Foods. However, Freshpet is 1.48 times more volatile than Nomad Foods. It trades about 0.09 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.01 per unit of risk. If you would invest 6,534 in Freshpet on August 27, 2024 and sell it today you would earn a total of 9,142 from holding Freshpet or generate 139.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. Nomad Foods
Performance |
| Timeline |
| Freshpet |
| Nomad Foods |
Freshpet and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and Nomad Foods
The main advantage of trading using opposite Freshpet and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet position performs unexpectedly, Nomad 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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