Correlation Between Collins Foods and Kip McGrath

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

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

Diversification Opportunities for Collins Foods and Kip McGrath

0.13

Correlation Coefficient

Collins Foods  Kip McGrath

Average diversification

The 3 months correlation between Collins and Kip is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education and Collins 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 Collins Foods are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Collins Foods i.e., Collins Foods and Kip McGrath go up and down completely randomly.

Pair Corralation between Collins Foods and Kip McGrath

Assuming the 90 days trading horizon Collins Foods is expected to generate 1.12 times more return on investment than Kip McGrath. However, Collins Foods is 1.12 times more volatile than Kip McGrath Education. It trades about 0.14 of its potential returns per unit of risk. Kip McGrath Education is currently generating about -0.03 per unit of risk. If you would invest  739.00  in Collins Foods on December 29, 2024 and sell it today you would earn a total of  142.00  from holding Collins Foods or generate 19.22% return on investment over 90 days.

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

Collins Foods  vs.  Kip McGrath Education

Collins Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Collins Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kip McGrath Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kip McGrath Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kip McGrath is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Collins Foods and Kip McGrath

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

The idea behind Collins Foods and Kip McGrath 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.