Correlation Between Innovative Food and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Innovative Food and Bunzl Plc 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 Innovative Food and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Food Hldg and Bunzl plc, you can compare the effects of market volatilities on Innovative Food and Bunzl Plc 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 Innovative Food with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Food and Bunzl Plc.
Diversification Opportunities for Innovative Food and Bunzl Plc
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovative and Bunzl is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Food Hldg and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Innovative Food 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 Innovative Food Hldg are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Innovative Food i.e., Innovative Food and Bunzl Plc go up and down completely randomly.
Pair Corralation between Innovative Food and Bunzl Plc
Given the investment horizon of 90 days Innovative Food Hldg is expected to generate 2.69 times more return on investment than Bunzl Plc. However, Innovative Food is 2.69 times more volatile than Bunzl plc. It trades about 0.26 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.03 per unit of risk. If you would invest 178.00 in Innovative Food Hldg on October 23, 2024 and sell it today you would earn a total of 21.00 from holding Innovative Food Hldg or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Food Hldg vs. Bunzl plc
Performance |
| Timeline |
| Innovative Food Hldg |
| Bunzl plc |
Innovative Food and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Food and Bunzl Plc
The main advantage of trading using opposite Innovative Food and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Food position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Innovative Food vs. Organto Foods | Innovative Food vs. Colabor Group | Innovative Food vs. Bunzl plc | Innovative Food vs. Hf Foods Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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