Correlation Between CONAGRA and Applied Digital

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

By analyzing existing cross correlation between CONAGRA BRANDS INC and Applied Digital, you can compare the effects of market volatilities on CONAGRA and Applied Digital 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 CONAGRA with a short position of Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONAGRA and Applied Digital.

Diversification Opportunities for CONAGRA and Applied Digital

0.07

Correlation Coefficient

CONAGRA  Applied Digital

Significant diversification

The 3 months correlation between CONAGRA and Applied is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA BRANDS INC and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and CONAGRA 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 CONAGRA BRANDS INC are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of CONAGRA i.e., CONAGRA and Applied Digital go up and down completely randomly.

Pair Corralation between CONAGRA and Applied Digital

Assuming the 90 days trading horizon CONAGRA is expected to generate 11.57 times less return on investment than Applied Digital. But when comparing it to its historical volatility, CONAGRA BRANDS INC is 8.19 times less risky than Applied Digital. It trades about 0.02 of its potential returns per unit of risk. Applied Digital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Applied Digital on October 22, 2024 and sell it today you would lose (23.00) from holding Applied Digital or give up 2.52% of portfolio value over 90 days.

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

CONAGRA BRANDS INC  vs.  Applied Digital

CONAGRA BRANDS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONAGRA BRANDS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONAGRA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Applied Digital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CONAGRA and Applied Digital

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

The idea behind CONAGRA BRANDS INC and Applied Digital 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.