Correlation Between NYSE Composite and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nomad Foods, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nomad Foods.
Diversification Opportunities for NYSE Composite and Nomad Foods
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Nomad is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Nomad Foods go up and down completely randomly.
Pair Corralation between NYSE Composite and Nomad Foods
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.44 times more return on investment than Nomad Foods. However, NYSE Composite is 2.3 times less risky than Nomad Foods. It trades about 0.08 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.01 per unit of risk. If you would invest 1,589,536 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 422,809 from holding NYSE Composite or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nomad Foods
Performance |
| Timeline |
NYSE Composite and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nomad Foods
Pair trading matchups for Nomad Foods
Pair Trading with NYSE Composite and Nomad Foods
The main advantage of trading using opposite NYSE Composite and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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