Correlation Between Glanbia Plc and Simply Good

Can any of the company-specific risk be diversified away by investing in both Glanbia Plc and Simply Good 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 Glanbia Plc and Simply Good into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Glanbia Plc and Simply Good

-0.95

Correlation Coefficient

Glanbia Plc  Simply Good

Pay attention - limited upside

The 3 months correlation between Glanbia and Simply is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia plc and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods and Glanbia Plc 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 Glanbia plc are associated (or correlated) with Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Glanbia Plc i.e., Glanbia Plc and Simply Good go up and down completely randomly.

Pair Corralation between Glanbia Plc and Simply Good

Assuming the 90 days horizon Glanbia plc is expected to generate 0.97 times more return on investment than Simply Good. However, Glanbia plc is 1.03 times less risky than Simply Good. It trades about 0.03 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.01 per unit of risk. If you would invest  1,274  in Glanbia plc on September 21, 2024 and sell it today you would earn a total of  206.00  from holding Glanbia plc or generate 16.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	71.52%
Values	Daily Returns

Glanbia plc  vs.  Simply Good Foods

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Simply Good Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Simply Good disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glanbia Plc and Simply Good

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

The idea behind Glanbia plc and Simply Good 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.