Correlation Between Sprouts Farmers and Companhia Brasileira
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Companhia Brasileira 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 Sprouts Farmers and Companhia Brasileira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Companhia Brasileira de, you can compare the effects of market volatilities on Sprouts Farmers and Companhia Brasileira 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 Sprouts Farmers with a short position of Companhia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Companhia Brasileira.
Diversification Opportunities for Sprouts Farmers and Companhia Brasileira
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sprouts and Companhia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Companhia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Brasileira and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Companhia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Brasileira has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Companhia Brasileira go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Companhia Brasileira
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 0.33 times more return on investment than Companhia Brasileira. However, Sprouts Farmers Market is 3.03 times less risky than Companhia Brasileira. It trades about 0.06 of its potential returns per unit of risk. Companhia Brasileira de is currently generating about -0.48 per unit of risk. If you would invest 6,229 in Sprouts Farmers Market on January 20, 2024 and sell it today you would earn a total of 81.00 from holding Sprouts Farmers Market or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Companhia Brasileira de
Performance |
| Timeline |
| Sprouts Farmers Market |
| Companhia Brasileira |
Sprouts Farmers and Companhia Brasileira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Companhia Brasileira
The main advantage of trading using opposite Sprouts Farmers and Companhia Brasileira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Companhia Brasileira 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 Companhia Brasileira will offset losses from the drop in Companhia Brasileira's long position.| Sprouts Farmers vs. Aquagold International | Sprouts Farmers vs. Morningstar Unconstrained Allocation | Sprouts Farmers vs. Thrivent High Yield | Sprouts Farmers vs. Via Renewables |
| Companhia Brasileira vs. LesliesInc | Companhia Brasileira vs. Sally Beauty Holdings | Companhia Brasileira vs. ODP Corp | Companhia Brasileira vs. 1 800 FLOWERSCOM |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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