Correlation Between Supermarket Income and Bell Food
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Bell 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 Supermarket Income and Bell Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Bell Food Group, you can compare the effects of market volatilities on Supermarket Income and Bell 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 Supermarket Income with a short position of Bell Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Bell Food.
Diversification Opportunities for Supermarket Income and Bell Food
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Supermarket and Bell is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Bell Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Food Group and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Bell Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Food Group has no effect on the direction of Supermarket Income i.e., Supermarket Income and Bell Food go up and down completely randomly.
Pair Corralation between Supermarket Income and Bell Food
Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Bell Food. In addition to that, Supermarket Income is 2.36 times more volatile than Bell Food Group. It trades about -0.03 of its total potential returns per unit of risk. Bell Food Group is currently generating about 0.16 per unit of volatility. If you would invest 26,500 in Bell Food Group on August 30, 2024 and sell it today you would earn a total of 400.00 from holding Bell Food Group or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. Bell Food Group
Performance |
| Timeline |
| Supermarket Income REIT |
| Bell Food Group |
Supermarket Income and Bell Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Bell Food
The main advantage of trading using opposite Supermarket Income and Bell Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, Bell 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 Bell Food will offset losses from the drop in Bell Food's long position.| Supermarket Income vs. Fevertree Drinks Plc | Supermarket Income vs. Check Point Software | Supermarket Income vs. International Biotechnology Trust | Supermarket Income vs. Pfeiffer Vacuum Technology |
| Bell Food vs. Tungsten West PLC | Bell Food vs. Argo Group Limited | Bell Food vs. Hardide PLC | Bell Food vs. Versarien PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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