Correlation Between Flowers Foods and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Dairy Farm 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 Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Dairy Farm International, you can compare the effects of market volatilities on Flowers Foods and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Dairy Farm.
Diversification Opportunities for Flowers Foods and Dairy Farm
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flowers and Dairy is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Flowers Foods i.e., Flowers Foods and Dairy Farm go up and down completely randomly.
Pair Corralation between Flowers Foods and Dairy Farm
Assuming the 90 days horizon Flowers Foods is expected to generate 0.62 times more return on investment than Dairy Farm. However, Flowers Foods is 1.6 times less risky than Dairy Farm. It trades about -0.11 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.1 per unit of risk. If you would invest 2,060 in Flowers Foods on October 9, 2024 and sell it today you would lose (40.00) from holding Flowers Foods or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Dairy Farm International
Performance |
| Timeline |
| Flowers Foods |
| Dairy Farm International |
Flowers Foods and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Dairy Farm
The main advantage of trading using opposite Flowers Foods and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Flowers Foods vs. Superior Plus Corp | Flowers Foods vs. NMI Holdings | Flowers Foods vs. SIVERS SEMICONDUCTORS AB | Flowers Foods vs. Talanx AG |
| Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. SIVERS SEMICONDUCTORS AB | Dairy Farm vs. Talanx AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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