Correlation Between Link Real and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Link Real and Nomad Foods 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 Link Real and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and Nomad Foods, you can compare the effects of market volatilities on Link Real and Nomad Foods 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 Link Real with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and Nomad Foods.
Diversification Opportunities for Link Real and Nomad Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Link and Nomad is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Link Real 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 Link Real Estate are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Link Real i.e., Link Real and Nomad Foods go up and down completely randomly.
Pair Corralation between Link Real and Nomad Foods
Assuming the 90 days horizon Link Real Estate is expected to generate 2.27 times more return on investment than Nomad Foods. However, Link Real is 2.27 times more volatile than Nomad Foods. It trades about 0.1 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.04 per unit of risk. If you would invest 270.00 in Link Real Estate on November 3, 2024 and sell it today you would earn a total of 131.00 from holding Link Real Estate or generate 48.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Link Real Estate vs. Nomad Foods
Performance |
| Timeline |
| Link Real Estate |
| Nomad Foods |
Link Real and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Real and Nomad Foods
The main advantage of trading using opposite Link Real and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| Link Real vs. OFFICE DEPOT | Link Real vs. alstria office REIT AG | Link Real vs. Dairy Farm International | Link Real vs. MAVEN WIRELESS SWEDEN |
| Nomad Foods vs. CVW CLEANTECH INC | Nomad Foods vs. Tokyu Construction Co | Nomad Foods vs. ALERION CLEANPOWER | Nomad Foods vs. CanSino Biologics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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