Correlation Between International Biotechnology and Hilton Food
Can any of the company-specific risk be diversified away by investing in both International Biotechnology and Hilton Food 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 International Biotechnology and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Biotechnology Trust and Hilton Food Group, you can compare the effects of market volatilities on International Biotechnology and Hilton Food 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 International Biotechnology with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Biotechnology and Hilton Food.
Diversification Opportunities for International Biotechnology and Hilton Food
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Hilton is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Biotechnology Tr and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and International Biotechnology 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 International Biotechnology Trust are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of International Biotechnology i.e., International Biotechnology and Hilton Food go up and down completely randomly.
Pair Corralation between International Biotechnology and Hilton Food
Assuming the 90 days trading horizon International Biotechnology Trust is expected to generate 0.79 times more return on investment than Hilton Food. However, International Biotechnology Trust is 1.27 times less risky than Hilton Food. It trades about 0.09 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.01 per unit of risk. If you would invest 64,158 in International Biotechnology Trust on November 3, 2024 and sell it today you would earn a total of 8,442 from holding International Biotechnology Trust or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Biotechnology Tr vs. Hilton Food Group
Performance |
| Timeline |
| International Biotechnology |
| Hilton Food Group |
International Biotechnology and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Biotechnology and Hilton Food
The main advantage of trading using opposite International Biotechnology and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Biotechnology position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.The idea behind International Biotechnology Trust and Hilton Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.
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