Correlation Between Post Holdings and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both Post Holdings and Flowers 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 Post Holdings and Flowers Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post Holdings and Flowers Foods, you can compare the effects of market volatilities on Post Holdings and Flowers 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 Post Holdings with a short position of Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post Holdings and Flowers Foods.
Diversification Opportunities for Post Holdings and Flowers Foods
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Post and Flowers is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods and Post Holdings 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 Post Holdings are associated (or correlated) with Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Post Holdings i.e., Post Holdings and Flowers Foods go up and down completely randomly.
Pair Corralation between Post Holdings and Flowers Foods
Given the investment horizon of 90 days Post Holdings is expected to generate 0.9 times more return on investment than Flowers Foods. However, Post Holdings is 1.11 times less risky than Flowers Foods. It trades about 0.04 of its potential returns per unit of risk. Flowers Foods is currently generating about -0.02 per unit of risk. If you would invest 9,335 in Post Holdings on August 27, 2024 and sell it today you would earn a total of 2,245 from holding Post Holdings or generate 24.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post Holdings vs. Flowers Foods
Performance |
| Timeline |
| Post Holdings |
| Flowers Foods |
Post Holdings and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post Holdings and Flowers Foods
The main advantage of trading using opposite Post Holdings and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post Holdings position performs unexpectedly, Flowers 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| Post Holdings vs. Bellring Brands LLC | Post Holdings vs. Ingredion Incorporated | Post Holdings vs. Nomad Foods | Post Holdings vs. Simply Good Foods |
| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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