Correlation Between Nates Food and Aryzta AG

Can any of the company-specific risk be diversified away by investing in both Nates Food and Aryzta AG 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 Nates Food and Aryzta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nates Food Co and Aryzta AG PK, you can compare the effects of market volatilities on Nates Food and Aryzta AG 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 Nates Food with a short position of Aryzta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nates Food and Aryzta AG.

Diversification Opportunities for Nates Food and Aryzta AG

0.61

Correlation Coefficient

Nates Food  Aryzta AG

Poor diversification

The 3 months correlation between Nates and Aryzta is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nates Food Co and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK and Nates 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 Nates Food Co are associated (or correlated) with Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of Nates Food i.e., Nates Food and Aryzta AG go up and down completely randomly.

Pair Corralation between Nates Food and Aryzta AG

Given the investment horizon of 90 days Nates Food Co is expected to generate 49.88 times more return on investment than Aryzta AG. However, Nates Food is 49.88 times more volatile than Aryzta AG PK. It trades about 0.21 of its potential returns per unit of risk. Aryzta AG PK is currently generating about 0.11 per unit of risk. If you would invest  0.00  in Nates Food Co on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Nates Food Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Nates Food Co  vs.  Aryzta AG PK

Nates Food

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aryzta AG PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nates Food and Aryzta AG

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

The idea behind Nates Food Co and Aryzta AG PK 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.