Correlation Between Bell Food and Leroy Seafood

Can any of the company-specific risk be diversified away by investing in both Bell Food and Leroy Seafood 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 Bell Food and Leroy Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bell Food Group and Leroy Seafood Group, you can compare the effects of market volatilities on Bell Food and Leroy Seafood 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 Bell Food with a short position of Leroy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Leroy Seafood.

Diversification Opportunities for Bell Food and Leroy Seafood

-0.21

Correlation Coefficient

Bell Food  Leroy Seafood

Very good diversification

The 3 months correlation between Bell and Leroy is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group and Bell Food 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 Bell Food Group are associated (or correlated) with Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Bell Food i.e., Bell Food and Leroy Seafood go up and down completely randomly.

Pair Corralation between Bell Food and Leroy Seafood

Assuming the 90 days trading horizon Bell Food Group is expected to under-perform the Leroy Seafood. In addition to that, Bell Food is 1.06 times more volatile than Leroy Seafood Group. It trades about -0.06 of its total potential returns per unit of risk. Leroy Seafood Group is currently generating about 0.06 per unit of volatility. If you would invest  4,888  in Leroy Seafood Group on December 23, 2024 and sell it today you would earn a total of  222.00  from holding Leroy Seafood Group or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Bell Food Group  vs.  Leroy Seafood Group

Bell Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bell Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bell Food is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leroy Seafood Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leroy Seafood Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Leroy Seafood is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bell Food and Leroy Seafood

The main advantage of trading using opposite Bell Food and Leroy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Leroy Seafood 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 Leroy Seafood will offset losses from the drop in Leroy Seafood's long position.

The idea behind Bell Food Group and Leroy Seafood Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.