Correlation Between Aryzta AG and Nates Food

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

By analyzing existing cross correlation between Aryzta AG PK and Nates Food Co, you can compare the effects of market volatilities on Aryzta AG and Nates 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 Aryzta AG with a short position of Nates Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and Nates Food.

Diversification Opportunities for Aryzta AG and Nates Food

0.61

Correlation Coefficient

Aryzta AG  Nates Food

Poor diversification

The 3 months correlation between Aryzta and Nates is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Nates Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nates Food and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with Nates Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nates Food has no effect on the direction of Aryzta AG i.e., Aryzta AG and Nates Food go up and down completely randomly.

Pair Corralation between Aryzta AG and Nates Food

Assuming the 90 days horizon Aryzta AG is expected to generate 93.1 times less return on investment than Nates Food. But when comparing it to its historical volatility, Aryzta AG PK is 49.88 times less risky than Nates Food. It trades about 0.11 of its potential returns per unit of risk. Nates Food Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Nates Food Co on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Nates Food Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Aryzta AG PK  vs.  Nates Food Co

Aryzta AG PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Nates Food

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aryzta AG and Nates Food

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

The idea behind Aryzta AG PK and Nates Food Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..