Correlation Between Mondelez International and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both Mondelez International and Rocky Mountain 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 Mondelez International and Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondelez International and Rocky Mountain Chocolate, you can compare the effects of market volatilities on Mondelez International and Rocky Mountain 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 Mondelez International with a short position of Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondelez International and Rocky Mountain.
Diversification Opportunities for Mondelez International and Rocky Mountain
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mondelez and Rocky is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mondelez International and Rocky Mountain Chocolate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Chocolate and Mondelez International 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 Mondelez International are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Chocolate has no effect on the direction of Mondelez International i.e., Mondelez International and Rocky Mountain go up and down completely randomly.
Pair Corralation between Mondelez International and Rocky Mountain
Given the investment horizon of 90 days Mondelez International is expected to generate 0.29 times more return on investment than Rocky Mountain. However, Mondelez International is 3.46 times less risky than Rocky Mountain. It trades about -0.07 of its potential returns per unit of risk. Rocky Mountain Chocolate is currently generating about -0.31 per unit of risk. If you would invest 5,950 in Mondelez International on November 3, 2024 and sell it today you would lose (151.00) from holding Mondelez International or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mondelez International vs. Rocky Mountain Chocolate
Performance |
| Timeline |
| Mondelez International |
| Rocky Mountain Chocolate |
Mondelez International and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondelez International and Rocky Mountain
The main advantage of trading using opposite Mondelez International and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondelez International position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.The idea behind Mondelez International and Rocky Mountain Chocolate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Rocky Mountain vs. Mondelez International | Rocky Mountain vs. Tootsie Roll Industries | Rocky Mountain vs. Chocoladefabriken Lindt Sprngli | Rocky Mountain vs. Barry Callebaut AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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