Correlation Between Retail Food and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Retail Food and Ecofibre 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 Retail Food and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Ecofibre, you can compare the effects of market volatilities on Retail Food and Ecofibre 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 Retail Food with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Ecofibre.
Diversification Opportunities for Retail Food and Ecofibre
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Retail and Ecofibre is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Retail 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 Retail Food Group are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Retail Food i.e., Retail Food and Ecofibre go up and down completely randomly.
Pair Corralation between Retail Food and Ecofibre
Assuming the 90 days trading horizon Retail Food Group is expected to generate 0.41 times more return on investment than Ecofibre. However, Retail Food Group is 2.43 times less risky than Ecofibre. It trades about -0.25 of its potential returns per unit of risk. Ecofibre is currently generating about -0.36 per unit of risk. If you would invest 316.00 in Retail Food Group on September 14, 2024 and sell it today you would lose (28.00) from holding Retail Food Group or give up 8.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Ecofibre
Performance |
| Timeline |
| Retail Food Group |
| Ecofibre |
Retail Food and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Ecofibre
The main advantage of trading using opposite Retail Food and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Retail Food vs. Farm Pride Foods | Retail Food vs. A1 Investments Resources | Retail Food vs. Sky Metals | Retail Food vs. Regal Investment |
| Ecofibre vs. Capitol Health | Ecofibre vs. Leeuwin Metals | Ecofibre vs. Sonic Healthcare | Ecofibre vs. BTC Health Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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