Correlation Between Flowers Foods and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Avanos Medical 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 Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Avanos Medical, you can compare the effects of market volatilities on Flowers Foods and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Avanos Medical.
Diversification Opportunities for Flowers Foods and Avanos Medical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Flowers and Avanos is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Flowers Foods i.e., Flowers Foods and Avanos Medical go up and down completely randomly.
Pair Corralation between Flowers Foods and Avanos Medical
Assuming the 90 days horizon Flowers Foods is expected to generate 1.01 times less return on investment than Avanos Medical. But when comparing it to its historical volatility, Flowers Foods is 1.89 times less risky than Avanos Medical. It trades about 0.22 of its potential returns per unit of risk. Avanos Medical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,740 in Avanos Medical on September 4, 2024 and sell it today you would earn a total of 120.00 from holding Avanos Medical or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Flowers Foods vs. Avanos Medical
Performance |
| Timeline |
| Flowers Foods |
| Avanos Medical |
Flowers Foods and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Avanos Medical
The main advantage of trading using opposite Flowers Foods and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| Flowers Foods vs. United Natural Foods | Flowers Foods vs. Wizz Air Holdings | Flowers Foods vs. SENECA FOODS A | Flowers Foods vs. United Rentals |
| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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