Correlation Between Kerry Group and Associated British
Can any of the company-specific risk be diversified away by investing in both Kerry Group and Associated British 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 Kerry Group and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group PLC and Associated British Foods, you can compare the effects of market volatilities on Kerry Group and Associated British 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 Kerry Group with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Associated British.
Diversification Opportunities for Kerry Group and Associated British
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kerry and Associated is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Kerry Group 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 Kerry Group PLC are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Kerry Group i.e., Kerry Group and Associated British go up and down completely randomly.
Pair Corralation between Kerry Group and Associated British
Assuming the 90 days horizon Kerry Group PLC is expected to generate 0.89 times more return on investment than Associated British. However, Kerry Group PLC is 1.12 times less risky than Associated British. It trades about 0.08 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.06 per unit of risk. If you would invest 8,423 in Kerry Group PLC on September 1, 2024 and sell it today you would earn a total of 1,327 from holding Kerry Group PLC or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry Group PLC vs. Associated British Foods
Performance |
| Timeline |
| Kerry Group PLC |
| Associated British Foods |
Kerry Group and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Associated British
The main advantage of trading using opposite Kerry Group and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Kerry Group vs. The A2 Milk | Kerry Group vs. Altavoz Entertainment | Kerry Group vs. Artisan Consumer Goods | Kerry Group vs. General Mills |
| Associated British vs. Artisan Consumer Goods | Associated British vs. Altavoz Entertainment | Associated British vs. Avi Ltd ADR | Associated British vs. The a2 Milk |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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