Correlation Between Swift Foods and Lepanto Consolidated

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

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

Diversification Opportunities for Swift Foods and Lepanto Consolidated

-0.24

Correlation Coefficient

Swift Foods  Lepanto Consolidated

Very good diversification

The 3 months correlation between Swift and Lepanto is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Swift Foods and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Swift 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 Swift Foods are associated (or correlated) with Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Swift Foods i.e., Swift Foods and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between Swift Foods and Lepanto Consolidated

Assuming the 90 days trading horizon Swift Foods is expected to under-perform the Lepanto Consolidated. In addition to that, Swift Foods is 1.02 times more volatile than Lepanto Consolidated Mining. It trades about -0.04 of its total potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about 0.08 per unit of volatility. If you would invest  6.60  in Lepanto Consolidated Mining on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Lepanto Consolidated Mining or generate 15.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.23%
Values	Daily Returns

Swift Foods  vs.  Lepanto Consolidated Mining

Swift Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swift Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lepanto Consolidated

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Lepanto Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swift Foods and Lepanto Consolidated

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

The idea behind Swift Foods and Lepanto Consolidated Mining 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.