Correlation Between Sif Holding and ForFarmers
Can any of the company-specific risk be diversified away by investing in both Sif Holding and ForFarmers 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 Sif Holding and ForFarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sif Holding NV and ForFarmers NV, you can compare the effects of market volatilities on Sif Holding and ForFarmers 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 Sif Holding with a short position of ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sif Holding and ForFarmers.
Diversification Opportunities for Sif Holding and ForFarmers
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sif and ForFarmers is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sif Holding NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and Sif Holding 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 Sif Holding NV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of Sif Holding i.e., Sif Holding and ForFarmers go up and down completely randomly.
Pair Corralation between Sif Holding and ForFarmers
Assuming the 90 days trading horizon Sif Holding NV is expected to under-perform the ForFarmers. In addition to that, Sif Holding is 1.53 times more volatile than ForFarmers NV. It trades about -0.22 of its total potential returns per unit of risk. ForFarmers NV is currently generating about -0.15 per unit of volatility. If you would invest 339.00 in ForFarmers NV on September 5, 2024 and sell it today you would lose (14.00) from holding ForFarmers NV or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sif Holding NV vs. ForFarmers NV
Performance |
| Timeline |
| Sif Holding NV |
| ForFarmers NV |
Sif Holding and ForFarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sif Holding and ForFarmers
The main advantage of trading using opposite Sif Holding and ForFarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sif Holding position performs unexpectedly, ForFarmers 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 ForFarmers will offset losses from the drop in ForFarmers' long position.| Sif Holding vs. Kendrion NV | Sif Holding vs. NV Nederlandsche Apparatenfabriek | Sif Holding vs. Brunel International NV | Sif Holding vs. TKH Group NV |
| ForFarmers vs. Unilever PLC | ForFarmers vs. Koninklijke Philips NV | ForFarmers vs. NN Group NV | ForFarmers vs. ING Groep NV |
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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