Correlation Between Fresh Del and Pet Acquisition
Can any of the company-specific risk be diversified away by investing in both Fresh Del and Pet Acquisition 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 Fresh Del and Pet Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresh Del Monte and Pet Acquisition LLC, you can compare the effects of market volatilities on Fresh Del and Pet Acquisition 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 Fresh Del with a short position of Pet Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Del and Pet Acquisition.
Diversification Opportunities for Fresh Del and Pet Acquisition
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fresh and Pet is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Del Monte and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC and Fresh Del 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 Fresh Del Monte are associated (or correlated) with Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of Fresh Del i.e., Fresh Del and Pet Acquisition go up and down completely randomly.
Pair Corralation between Fresh Del and Pet Acquisition
Considering the 90-day investment horizon Fresh Del Monte is expected to generate 0.2 times more return on investment than Pet Acquisition. However, Fresh Del Monte is 4.89 times less risky than Pet Acquisition. It trades about 0.1 of its potential returns per unit of risk. Pet Acquisition LLC is currently generating about -0.15 per unit of risk. If you would invest 2,550 in Fresh Del Monte on January 26, 2024 and sell it today you would earn a total of 53.00 from holding Fresh Del Monte or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresh Del Monte vs. Pet Acquisition LLC
Performance |
| Timeline |
| Fresh Del Monte |
| Pet Acquisition LLC |
Fresh Del and Pet Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresh Del and Pet Acquisition
The main advantage of trading using opposite Fresh Del and Pet Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Del position performs unexpectedly, Pet Acquisition 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 Pet Acquisition will offset losses from the drop in Pet Acquisition's long position.The idea behind Fresh Del Monte and Pet Acquisition LLC 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.| Pet Acquisition vs. Target | Pet Acquisition vs. Lowes Companies | Pet Acquisition vs. Kohls Corp | Pet Acquisition vs. Gap Inc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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