Correlation Between BBB Foods and Eisai Co
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Eisai Co 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 BBB Foods and Eisai Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Eisai Co, you can compare the effects of market volatilities on BBB Foods and Eisai Co 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 BBB Foods with a short position of Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Eisai Co.
Diversification Opportunities for BBB Foods and Eisai Co
Excellent diversification
The 3 months correlation between BBB and Eisai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co and BBB Foods 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 BBB Foods are associated (or correlated) with Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of BBB Foods i.e., BBB Foods and Eisai Co go up and down completely randomly.
Pair Corralation between BBB Foods and Eisai Co
Given the investment horizon of 90 days BBB Foods is expected to generate 0.79 times more return on investment than Eisai Co. However, BBB Foods is 1.27 times less risky than Eisai Co. It trades about 0.09 of its potential returns per unit of risk. Eisai Co is currently generating about -0.08 per unit of risk. If you would invest 1,750 in BBB Foods on September 1, 2024 and sell it today you would earn a total of 1,072 from holding BBB Foods or generate 61.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 44.47% |
| Values | Daily Returns |
BBB Foods vs. Eisai Co
Performance |
| Timeline |
| BBB Foods |
| Eisai Co |
BBB Foods and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Eisai Co
The main advantage of trading using opposite BBB Foods and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co's long position.| BBB Foods vs. Ingles Markets Incorporated | BBB Foods vs. Grocery Outlet Holding | BBB Foods vs. Ocado Group plc | BBB Foods vs. Sprouts Farmers Market |
| Eisai Co vs. BBB Foods | Eisai Co vs. Fidus Investment Corp | Eisai Co vs. Crombie Real Estate | Eisai Co vs. Cedar Realty Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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