Correlation Between Collins Foods and Nutritional Growth

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

By analyzing existing cross correlation between Collins Foods and Nutritional Growth Solutions, you can compare the effects of market volatilities on Collins Foods and Nutritional Growth 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 Nutritional Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Nutritional Growth.

Diversification Opportunities for Collins Foods and Nutritional Growth

-0.72

Correlation Coefficient

Collins Foods  Nutritional Growth

Pay attention - limited upside

The 3 months correlation between Collins and Nutritional is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Nutritional Growth Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutritional Growth 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 Nutritional Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutritional Growth has no effect on the direction of Collins Foods i.e., Collins Foods and Nutritional Growth go up and down completely randomly.

Pair Corralation between Collins Foods and Nutritional Growth

Assuming the 90 days trading horizon Collins Foods is expected to generate 7167.48 times less return on investment than Nutritional Growth. But when comparing it to its historical volatility, Collins Foods is 148.14 times less risky than Nutritional Growth. It trades about 0.01 of its potential returns per unit of risk. Nutritional Growth Solutions is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Nutritional Growth Solutions on October 9, 2024 and sell it today you would lose (45.50) from holding Nutritional Growth Solutions or give up 91.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.98%
Values	Daily Returns

Collins Foods  vs.  Nutritional Growth Solutions

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nutritional Growth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Nutritional Growth Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Nutritional Growth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collins Foods and Nutritional Growth

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

The idea behind Collins Foods and Nutritional Growth Solutions 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.