Correlation Between Strauss and Willy Food
Can any of the company-specific risk be diversified away by investing in both Strauss and Willy Food 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 Strauss and Willy Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strauss Group and Willy Food, you can compare the effects of market volatilities on Strauss and Willy Food 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 Strauss with a short position of Willy Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strauss and Willy Food.
Diversification Opportunities for Strauss and Willy Food
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strauss and Willy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Strauss Group and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food and Strauss 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 Strauss Group are associated (or correlated) with Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Strauss i.e., Strauss and Willy Food go up and down completely randomly.
Pair Corralation between Strauss and Willy Food
Assuming the 90 days trading horizon Strauss Group is expected to generate 0.67 times more return on investment than Willy Food. However, Strauss Group is 1.49 times less risky than Willy Food. It trades about -0.01 of its potential returns per unit of risk. Willy Food is currently generating about -0.01 per unit of risk. If you would invest 813,860 in Strauss Group on August 28, 2024 and sell it today you would lose (117,960) from holding Strauss Group or give up 14.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strauss Group vs. Willy Food
Performance |
| Timeline |
| Strauss Group |
| Willy Food |
Strauss and Willy Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strauss and Willy Food
The main advantage of trading using opposite Strauss and Willy Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strauss position performs unexpectedly, Willy Food 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 Willy Food will offset losses from the drop in Willy Food's long position.The idea behind Strauss Group and Willy Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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