Correlation Between Glanbia PLC and Real Good

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

By analyzing existing cross correlation between Glanbia PLC ADR and Real Good Food, you can compare the effects of market volatilities on Glanbia PLC and Real 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 Real Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and Real Good.

Diversification Opportunities for Glanbia PLC and Real Good

0.15

Correlation Coefficient

Glanbia PLC  Real Good

Average diversification

The 3 months correlation between Glanbia and Real is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC ADR and Real Good Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Good Food 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 ADR are associated (or correlated) with Real Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Good Food has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Real Good go up and down completely randomly.

Pair Corralation between Glanbia PLC and Real Good

Assuming the 90 days horizon Glanbia PLC ADR is expected to generate 0.51 times more return on investment than Real Good. However, Glanbia PLC ADR is 1.94 times less risky than Real Good. It trades about 0.07 of its potential returns per unit of risk. Real Good Food is currently generating about -0.06 per unit of risk. If you would invest  5,196  in Glanbia PLC ADR on September 20, 2024 and sell it today you would earn a total of  4,279  from holding Glanbia PLC ADR or generate 82.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.89%
Values	Daily Returns

Glanbia PLC ADR  vs.  Real Good Food

Glanbia PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Glanbia PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Real Good Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Glanbia PLC and Real Good

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

The idea behind Glanbia PLC ADR and Real Good Food 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.