Correlation Between RETAIL FOOD and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and BROADWIND ENRGY 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 RETAIL FOOD and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and BROADWIND ENRGY, you can compare the effects of market volatilities on RETAIL FOOD and BROADWIND ENRGY 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 RETAIL FOOD with a short position of BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and BROADWIND ENRGY.
Diversification Opportunities for RETAIL FOOD and BROADWIND ENRGY
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RETAIL and BROADWIND is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and RETAIL 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 RETAIL FOOD GROUP are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between RETAIL FOOD and BROADWIND ENRGY
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the BROADWIND ENRGY. But the stock apears to be less risky and, when comparing its historical volatility, RETAIL FOOD GROUP is 1.39 times less risky than BROADWIND ENRGY. The stock trades about -0.13 of its potential returns per unit of risk. The BROADWIND ENRGY is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 179.00 in BROADWIND ENRGY on October 30, 2024 and sell it today you would lose (11.00) from holding BROADWIND ENRGY or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. BROADWIND ENRGY
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| BROADWIND ENRGY |
RETAIL FOOD and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and BROADWIND ENRGY
The main advantage of trading using opposite RETAIL FOOD and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| RETAIL FOOD vs. Spirent Communications plc | RETAIL FOOD vs. Cogent Communications Holdings | RETAIL FOOD vs. Suntory Beverage Food | RETAIL FOOD vs. TYSON FOODS A |
| BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY vs. Apple Inc | BROADWIND ENRGY 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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