Correlation Between Millennium Food and Summit
Can any of the company-specific risk be diversified away by investing in both Millennium Food and Summit 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 Millennium Food and Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Millennium Food Tech LP and Summit, you can compare the effects of market volatilities on Millennium Food and Summit 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 Millennium Food with a short position of Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Millennium Food and Summit.
Diversification Opportunities for Millennium Food and Summit
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Millennium and Summit is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Millennium Food Tech LP and Summit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit and Millennium 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 Millennium Food Tech LP are associated (or correlated) with Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit has no effect on the direction of Millennium Food i.e., Millennium Food and Summit go up and down completely randomly.
Pair Corralation between Millennium Food and Summit
Assuming the 90 days trading horizon Millennium Food Tech LP is expected to under-perform the Summit. But the stock apears to be less risky and, when comparing its historical volatility, Millennium Food Tech LP is 1.47 times less risky than Summit. The stock trades about -0.16 of its potential returns per unit of risk. The Summit is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 582,400 in Summit on August 29, 2024 and sell it today you would earn a total of 11,600 from holding Summit or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Millennium Food Tech LP vs. Summit
Performance |
| Timeline |
| Millennium Food Tech |
| Summit |
Millennium Food and Summit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Millennium Food and Summit
The main advantage of trading using opposite Millennium Food and Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Millennium Food position performs unexpectedly, Summit 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 Summit will offset losses from the drop in Summit's long position.The idea behind Millennium Food Tech LP and Summit 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.| Summit vs. Israel Canada | Summit vs. Delek Group | Summit vs. Shikun Binui | Summit vs. Israel Discount Bank |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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