Correlation Between Nestle SA and Greencore Group
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Greencore Group 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 Nestle SA and Greencore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Greencore Group PLC, you can compare the effects of market volatilities on Nestle SA and Greencore Group 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 Nestle SA with a short position of Greencore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Greencore Group.
Diversification Opportunities for Nestle SA and Greencore Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nestle and Greencore is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Greencore Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencore Group PLC and Nestle SA 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 Nestle SA are associated (or correlated) with Greencore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencore Group PLC has no effect on the direction of Nestle SA i.e., Nestle SA and Greencore Group go up and down completely randomly.
Pair Corralation between Nestle SA and Greencore Group
Assuming the 90 days horizon Nestle SA is expected to under-perform the Greencore Group. In addition to that, Nestle SA is 1.51 times more volatile than Greencore Group PLC. It trades about -0.39 of its total potential returns per unit of risk. Greencore Group PLC is currently generating about -0.32 per unit of volatility. If you would invest 1,051 in Greencore Group PLC on September 4, 2024 and sell it today you would lose (47.00) from holding Greencore Group PLC or give up 4.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nestle SA vs. Greencore Group PLC
Performance |
| Timeline |
| Nestle SA |
| Greencore Group PLC |
Nestle SA and Greencore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and Greencore Group
The main advantage of trading using opposite Nestle SA and Greencore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Greencore Group 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 Greencore Group will offset losses from the drop in Greencore Group's long position.| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
| Greencore Group vs. National CineMedia | Greencore Group vs. Emerson Radio | Greencore Group vs. BW Offshore Limited | Greencore Group vs. Solstad Offshore ASA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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