Correlation Between Archer Daniels and Mamas Creations

Can any of the company-specific risk be diversified away by investing in both Archer Daniels and Mamas Creations 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 Archer Daniels and Mamas Creations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Archer Daniels Midland and Mamas Creations, you can compare the effects of market volatilities on Archer Daniels and Mamas Creations 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 Archer Daniels with a short position of Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Mamas Creations.

Diversification Opportunities for Archer Daniels and Mamas Creations

0.69

Correlation Coefficient

Archer Daniels  Mamas Creations

Poor diversification

The 3 months correlation between Archer and Mamas is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Archer Daniels i.e., Archer Daniels and Mamas Creations go up and down completely randomly.

Pair Corralation between Archer Daniels and Mamas Creations

Considering the 90-day investment horizon Archer Daniels Midland is expected to generate 0.42 times more return on investment than Mamas Creations. However, Archer Daniels Midland is 2.39 times less risky than Mamas Creations. It trades about -0.12 of its potential returns per unit of risk. Mamas Creations is currently generating about -0.17 per unit of risk. If you would invest  5,367  in Archer Daniels Midland on December 1, 2024 and sell it today you would lose (647.00) from holding Archer Daniels Midland or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Archer Daniels Midland  vs.  Mamas Creations

Archer Daniels Midland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mamas Creations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Archer Daniels and Mamas Creations

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

The idea behind Archer Daniels Midland and Mamas Creations 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.