Correlation Between CONAGRA FOODS and G8 EDUCATION

Can any of the company-specific risk be diversified away by investing in both CONAGRA FOODS and G8 EDUCATION 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 G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CONAGRA FOODS and G8 EDUCATION, you can compare the effects of market volatilities on CONAGRA FOODS and G8 EDUCATION 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 G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONAGRA FOODS and G8 EDUCATION.

Diversification Opportunities for CONAGRA FOODS and G8 EDUCATION

0.59

Correlation Coefficient

CONAGRA FOODS  G8 EDUCATION

Very weak diversification

The 3 months correlation between CONAGRA and 3EAG is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION 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 G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of CONAGRA FOODS i.e., CONAGRA FOODS and G8 EDUCATION go up and down completely randomly.

Pair Corralation between CONAGRA FOODS and G8 EDUCATION

Assuming the 90 days trading horizon CONAGRA FOODS is expected to under-perform the G8 EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, CONAGRA FOODS is 1.54 times less risky than G8 EDUCATION. The stock trades about -0.03 of its potential returns per unit of risk. The G8 EDUCATION is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  64.00  in G8 EDUCATION on October 3, 2024 and sell it today you would earn a total of  14.00  from holding G8 EDUCATION or generate 21.88% return on investment over 90 days.

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

CONAGRA FOODS  vs.  G8 EDUCATION

CONAGRA FOODS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONAGRA FOODS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CONAGRA FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CONAGRA FOODS and G8 EDUCATION

The main advantage of trading using opposite CONAGRA FOODS and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.

The idea behind CONAGRA FOODS and G8 EDUCATION 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.