Correlation Between Target and Innovative Food
Can any of the company-specific risk be diversified away by investing in both Target and Innovative 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 Target and Innovative Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Innovative Food Hldg, you can compare the effects of market volatilities on Target and Innovative 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 Target with a short position of Innovative Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Innovative Food.
Diversification Opportunities for Target and Innovative Food
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Target and Innovative is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Target and Innovative Food Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Food Hldg and Target 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 Target are associated (or correlated) with Innovative Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Food Hldg has no effect on the direction of Target i.e., Target and Innovative Food go up and down completely randomly.
Pair Corralation between Target and Innovative Food
Considering the 90-day investment horizon Target is expected to generate 11.88 times less return on investment than Innovative Food. But when comparing it to its historical volatility, Target is 2.01 times less risky than Innovative Food. It trades about 0.02 of its potential returns per unit of risk. Innovative Food Hldg is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Innovative Food Hldg on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Innovative Food Hldg or generate 330.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Innovative Food Hldg
Performance |
| Timeline |
| Target |
| Innovative Food Hldg |
Target and Innovative Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Innovative Food
The main advantage of trading using opposite Target and Innovative Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Innovative 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 Innovative Food will offset losses from the drop in Innovative Food's long position.| Target vs. Dollar General | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
| Innovative Food vs. Organto Foods | Innovative Food vs. Colabor Group | Innovative Food vs. Bunzl plc | Innovative Food vs. Hf Foods Group |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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