Correlation Between WH Group and Central Garden
Can any of the company-specific risk be diversified away by investing in both WH Group and Central Garden 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 WH Group and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WH Group Limited and Central Garden Pet, you can compare the effects of market volatilities on WH Group and Central Garden 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 WH Group with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and Central Garden.
Diversification Opportunities for WH Group and Central Garden
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WHGRF and Central is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and WH Group 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 WH Group Limited are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of WH Group i.e., WH Group and Central Garden go up and down completely randomly.
Pair Corralation between WH Group and Central Garden
Assuming the 90 days horizon WH Group Limited is expected to generate 8.01 times more return on investment than Central Garden. However, WH Group is 8.01 times more volatile than Central Garden Pet. It trades about 0.1 of its potential returns per unit of risk. Central Garden Pet is currently generating about 0.03 per unit of risk. If you would invest 27.00 in WH Group Limited on August 31, 2024 and sell it today you would earn a total of 52.00 from holding WH Group Limited or generate 192.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 54.01% |
| Values | Daily Returns |
WH Group Limited vs. Central Garden Pet
Performance |
| Timeline |
| WH Group Limited |
| Central Garden Pet |
WH Group and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and Central Garden
The main advantage of trading using opposite WH Group and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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