Correlation Between Retail Food and EROAD
Can any of the company-specific risk be diversified away by investing in both Retail Food and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on Retail Food and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and EROAD.
Diversification Opportunities for Retail Food and EROAD
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and EROAD is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Retail Food i.e., Retail Food and EROAD go up and down completely randomly.
Pair Corralation between Retail Food and EROAD
Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, Retail Food Group is 1.54 times less risky than EROAD. The stock trades about -0.02 of its potential returns per unit of risk. The EROAD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 69.00 in EROAD on October 13, 2024 and sell it today you would earn a total of 27.00 from holding EROAD or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. EROAD
Performance |
| Timeline |
| Retail Food Group |
| EROAD |
Retail Food and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and EROAD
The main advantage of trading using opposite Retail Food and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Retail Food vs. Sandon Capital Investments | Retail Food vs. Kneomedia | Retail Food vs. BKI Investment | Retail Food vs. A1 Investments Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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