Correlation Between A2 Milk and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both A2 Milk and Nomad Foods 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 A2 Milk and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The A2 Milk and Nomad Foods, you can compare the effects of market volatilities on A2 Milk and Nomad Foods 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 A2 Milk with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2 Milk and Nomad Foods.
Diversification Opportunities for A2 Milk and Nomad Foods
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ACOPY and Nomad is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The A2 Milk and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and A2 Milk 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 The A2 Milk are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of A2 Milk i.e., A2 Milk and Nomad Foods go up and down completely randomly.
Pair Corralation between A2 Milk and Nomad Foods
Assuming the 90 days horizon The A2 Milk is expected to generate 2.2 times more return on investment than Nomad Foods. However, A2 Milk is 2.2 times more volatile than Nomad Foods. It trades about 0.05 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.01 per unit of risk. If you would invest 268.00 in The A2 Milk on September 25, 2024 and sell it today you would earn a total of 77.00 from holding The A2 Milk or generate 28.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.6% |
Values | Daily Returns |
The A2 Milk vs. Nomad Foods
Performance |
Timeline |
A2 Milk |
Nomad Foods |
A2 Milk and Nomad Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with A2 Milk and Nomad Foods
The main advantage of trading using opposite A2 Milk and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2 Milk position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. The a2 Milk | A2 Milk vs. Aryzta AG PK |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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