Correlation Between ConAgra Foods and Associated British

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

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

Diversification Opportunities for ConAgra Foods and Associated British

0.68

Correlation Coefficient

ConAgra Foods  Associated British

Poor diversification

The 3 months correlation between ConAgra and Associated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and ConAgra Foods 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 ConAgra Foods are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Associated British go up and down completely randomly.

Pair Corralation between ConAgra Foods and Associated British

Considering the 90-day investment horizon ConAgra Foods is expected to generate 1.05 times more return on investment than Associated British. However, ConAgra Foods is 1.05 times more volatile than Associated British Foods. It trades about 0.05 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.12 per unit of risk. If you would invest  2,648  in ConAgra Foods on September 20, 2024 and sell it today you would earn a total of  33.00  from holding ConAgra Foods or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

ConAgra Foods  vs.  Associated British Foods

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with ConAgra Foods and Associated British

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

The idea behind ConAgra Foods and Associated British Foods 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.