Correlation Between GWILLI FOOD and Nomad Foods

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

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

Diversification Opportunities for GWILLI FOOD and Nomad Foods

0.06

Correlation Coefficient

GWILLI FOOD  Nomad Foods

Significant diversification

The 3 months correlation between GWILLI and Nomad is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and GWILLI FOOD 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 GWILLI FOOD are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of GWILLI FOOD i.e., GWILLI FOOD and Nomad Foods go up and down completely randomly.

Pair Corralation between GWILLI FOOD and Nomad Foods

Assuming the 90 days trading horizon GWILLI FOOD is expected to under-perform the Nomad Foods. But the stock apears to be less risky and, when comparing its historical volatility, GWILLI FOOD is 1.11 times less risky than Nomad Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Nomad Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,555  in Nomad Foods on December 21, 2024 and sell it today you would earn a total of  225.00  from holding Nomad Foods or generate 14.47% return on investment over 90 days.

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

GWILLI FOOD  vs.  Nomad Foods

GWILLI FOOD

Risk-Adjusted Performance

Very Weak

Over the last 90 days GWILLI FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Nomad Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomad Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Nomad Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GWILLI FOOD and Nomad Foods

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

The idea behind GWILLI FOOD and Nomad 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.