Correlation Between BBB Foods and Land Securities
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Land Securities 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 Land Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Land Securities Group, you can compare the effects of market volatilities on BBB Foods and Land Securities 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 Land Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Land Securities.
Diversification Opportunities for BBB Foods and Land Securities
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between BBB and Land is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group 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 Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of BBB Foods i.e., BBB Foods and Land Securities go up and down completely randomly.
Pair Corralation between BBB Foods and Land Securities
Given the investment horizon of 90 days BBB Foods is expected to generate 0.71 times more return on investment than Land Securities. However, BBB Foods is 1.42 times less risky than Land Securities. It trades about 0.09 of its potential returns per unit of risk. Land Securities Group is currently generating about 0.03 per unit of risk. If you would invest 1,750 in BBB Foods on September 14, 2024 and sell it today you would earn a total of 1,114 from holding BBB Foods or generate 63.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.58% |
| Values | Daily Returns |
BBB Foods vs. Land Securities Group
Performance |
| Timeline |
| BBB Foods |
| Land Securities Group |
BBB Foods and Land Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Land Securities
The main advantage of trading using opposite BBB Foods and Land Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Land Securities 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 Land Securities will offset losses from the drop in Land Securities' long position.| BBB Foods vs. Costco Wholesale Corp | BBB Foods vs. BJs Wholesale Club | BBB Foods vs. Dollar Tree | BBB Foods vs. Dollar General |
| Land Securities vs. Franklin Wireless Corp | Land Securities vs. Nyxoah | Land Securities vs. AMCON Distributing | Land Securities vs. BBB Foods |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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