Correlation Between Associated British and Yuenglings Ice

Can any of the company-specific risk be diversified away by investing in both Associated British and Yuenglings Ice 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 Associated British and Yuenglings Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated British Foods and Yuenglings Ice Cream, you can compare the effects of market volatilities on Associated British and Yuenglings Ice 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 Associated British with a short position of Yuenglings Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Yuenglings Ice.

Diversification Opportunities for Associated British and Yuenglings Ice

0.28

Correlation Coefficient

Associated British  Yuenglings Ice

Modest diversification

The 3 months correlation between Associated and Yuenglings is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Yuenglings Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuenglings Ice Cream and Associated British 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 Associated British Foods are associated (or correlated) with Yuenglings Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuenglings Ice Cream has no effect on the direction of Associated British i.e., Associated British and Yuenglings Ice go up and down completely randomly.

Pair Corralation between Associated British and Yuenglings Ice

Assuming the 90 days horizon Associated British is expected to generate 27.0 times less return on investment than Yuenglings Ice. But when comparing it to its historical volatility, Associated British Foods is 13.29 times less risky than Yuenglings Ice. It trades about 0.04 of its potential returns per unit of risk. Yuenglings Ice Cream is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Yuenglings Ice Cream on October 3, 2024 and sell it today you would lose (0.39) from holding Yuenglings Ice Cream or give up 57.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Associated British Foods  vs.  Yuenglings Ice Cream

Associated British Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated British Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Yuenglings Ice Cream

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yuenglings Ice Cream are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Yuenglings Ice displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated British and Yuenglings Ice

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

The idea behind Associated British Foods and Yuenglings Ice Cream 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.