Correlation Between Kip McGrath and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Kip McGrath and Farm Pride 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 Kip McGrath and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kip McGrath Education and Farm Pride Foods, you can compare the effects of market volatilities on Kip McGrath and Farm Pride 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 Kip McGrath with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kip McGrath and Farm Pride.
Diversification Opportunities for Kip McGrath and Farm Pride
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kip and Farm is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Kip McGrath i.e., Kip McGrath and Farm Pride go up and down completely randomly.
Pair Corralation between Kip McGrath and Farm Pride
Assuming the 90 days trading horizon Kip McGrath Education is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, Kip McGrath Education is 5.52 times less risky than Farm Pride. The stock trades about -0.18 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Farm Pride Foods on October 17, 2024 and sell it today you would earn a total of 2.00 from holding Farm Pride Foods or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kip McGrath Education vs. Farm Pride Foods
Performance |
| Timeline |
| Kip McGrath Education |
| Farm Pride Foods |
Kip McGrath and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kip McGrath and Farm Pride
The main advantage of trading using opposite Kip McGrath and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kip McGrath position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| Kip McGrath vs. Skycity Entertainment Group | Kip McGrath vs. ARN Media Limited | Kip McGrath vs. Insurance Australia Group | Kip McGrath vs. My Foodie Box |
| Farm Pride vs. Embark Education Group | Farm Pride vs. Pure Foods Tasmania | Farm Pride vs. Kip McGrath Education | Farm Pride vs. Air New Zealand |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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