Correlation Between Simply Good and Associated British
Can any of the company-specific risk be diversified away by investing in both Simply Good and Associated British 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 Simply Good and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Good Foods and Associated British Foods, you can compare the effects of market volatilities on Simply Good and Associated British 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 Simply Good with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Associated British.
Diversification Opportunities for Simply Good and Associated British
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Simply and Associated is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Simply Good 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 Simply Good Foods are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Simply Good i.e., Simply Good and Associated British go up and down completely randomly.
Pair Corralation between Simply Good and Associated British
Given the investment horizon of 90 days Simply Good Foods is expected to generate 1.07 times more return on investment than Associated British. However, Simply Good is 1.07 times more volatile than Associated British Foods. It trades about 0.52 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.21 per unit of risk. If you would invest 3,394 in Simply Good Foods on August 31, 2024 and sell it today you would earn a total of 598.00 from holding Simply Good Foods or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Good Foods vs. Associated British Foods
Performance |
| Timeline |
| Simply Good Foods |
| Associated British Foods |
Simply Good and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and Associated British
The main advantage of trading using opposite Simply Good and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| Associated British vs. Darling Ingredients | Associated British vs. JM Smucker | Associated British vs. McCormick Company Incorporated | Associated British vs. Campbell Soup |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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