Correlation Between Flowers Foods and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Retail Estates 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 Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Retail Estates NV, you can compare the effects of market volatilities on Flowers Foods and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Retail Estates.
Diversification Opportunities for Flowers Foods and Retail Estates
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flowers and Retail is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Flowers Foods i.e., Flowers Foods and Retail Estates go up and down completely randomly.
Pair Corralation between Flowers Foods and Retail Estates
Assuming the 90 days horizon Flowers Foods is expected to under-perform the Retail Estates. In addition to that, Flowers Foods is 1.05 times more volatile than Retail Estates NV. It trades about -0.02 of its total potential returns per unit of risk. Retail Estates NV is currently generating about 0.03 per unit of volatility. If you would invest 5,022 in Retail Estates NV on October 23, 2024 and sell it today you would earn a total of 678.00 from holding Retail Estates NV or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Retail Estates NV
Performance |
| Timeline |
| Flowers Foods |
| Retail Estates NV |
Flowers Foods and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Retail Estates
The main advantage of trading using opposite Flowers Foods and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Flowers Foods vs. Pentair plc | Flowers Foods vs. ALTAIR RES INC | Flowers Foods vs. AOI Electronics Co | Flowers Foods vs. ARROW ELECTRONICS |
| Retail Estates vs. Simon Property Group | Retail Estates vs. Realty Income | Retail Estates vs. Link Real Estate | Retail Estates vs. Range Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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