Correlation Between Nomad Foods and Simply Good

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

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

Diversification Opportunities for Nomad Foods and Simply Good

-0.27

Correlation Coefficient

Nomad Foods  Simply Good

Very good diversification

The 3 months correlation between Nomad and Simply is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods 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 Nomad Foods 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 Nomad Foods 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 Nomad Foods i.e., Nomad Foods and Simply Good go up and down completely randomly.

Pair Corralation between Nomad Foods and Simply Good

Given the investment horizon of 90 days Nomad Foods is expected to generate 2.25 times less return on investment than Simply Good. In addition to that, Nomad Foods is 1.58 times more volatile than Simply Good Foods. It trades about 0.04 of its total potential returns per unit of risk. Simply Good Foods is currently generating about 0.15 per unit of volatility. If you would invest  3,778  in Simply Good Foods on September 19, 2024 and sell it today you would earn a total of  128.00  from holding Simply Good Foods or generate 3.39% return on investment over 90 days.

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

Nomad Foods  vs.  Simply Good Foods

Nomad Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomad Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Simply Good Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 13 (%) 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 Nomad Foods and Simply Good

The main advantage of trading using opposite Nomad Foods and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods 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 Nomad Foods 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.