Correlation Between Simply Good and Post Holdings
Can any of the company-specific risk be diversified away by investing in both Simply Good and Post Holdings 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 Post Holdings 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 Post Holdings, you can compare the effects of market volatilities on Simply Good and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Post Holdings.
Diversification Opportunities for Simply Good and Post Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simply and Post is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Simply Good i.e., Simply Good and Post Holdings go up and down completely randomly.
Pair Corralation between Simply Good and Post Holdings
Given the investment horizon of 90 days Simply Good Foods is expected to generate 1.67 times more return on investment than Post Holdings. However, Simply Good is 1.67 times more volatile than Post Holdings. It trades about 0.1 of its potential returns per unit of risk. Post Holdings is currently generating about -0.07 per unit of risk. If you would invest 3,229 in Simply Good Foods on November 2, 2024 and sell it today you would earn a total of 601.00 from holding Simply Good Foods or generate 18.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Good Foods vs. Post Holdings
Performance |
| Timeline |
| Simply Good Foods |
| Post Holdings |
Simply Good and Post Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and Post Holdings
The main advantage of trading using opposite Simply Good and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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