Correlation Between RETAIL FOOD and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and FLOW TRADERS 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 RETAIL FOOD and FLOW TRADERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and FLOW TRADERS LTD, you can compare the effects of market volatilities on RETAIL FOOD and FLOW TRADERS 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 RETAIL FOOD with a short position of FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and FLOW TRADERS.
Diversification Opportunities for RETAIL FOOD and FLOW TRADERS
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RETAIL and FLOW is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD and RETAIL 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 RETAIL FOOD GROUP are associated (or correlated) with FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and FLOW TRADERS go up and down completely randomly.
Pair Corralation between RETAIL FOOD and FLOW TRADERS
Assuming the 90 days trading horizon RETAIL FOOD is expected to generate 2.75 times less return on investment than FLOW TRADERS. In addition to that, RETAIL FOOD is 1.36 times more volatile than FLOW TRADERS LTD. It trades about 0.05 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.19 per unit of volatility. If you would invest 1,776 in FLOW TRADERS LTD on September 6, 2024 and sell it today you would earn a total of 304.00 from holding FLOW TRADERS LTD or generate 17.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
RETAIL FOOD GROUP vs. FLOW TRADERS LTD
Performance |
Timeline |
RETAIL FOOD GROUP |
FLOW TRADERS LTD |
RETAIL FOOD and FLOW TRADERS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RETAIL FOOD and FLOW TRADERS
The main advantage of trading using opposite RETAIL FOOD and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
FLOW TRADERS vs. DEVRY EDUCATION GRP | FLOW TRADERS vs. Gamma Communications plc | FLOW TRADERS vs. Spirent Communications plc | FLOW TRADERS vs. Adtalem Global Education |
Check out your portfolio center.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 Valuation module to check real value of public entities based on technical and fundamental data.
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