Correlation Between Meta Data and ConAgra Foods

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

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

Diversification Opportunities for Meta Data and ConAgra Foods

-0.56

Correlation Coefficient

Meta Data  ConAgra Foods

Excellent diversification

The 3 months correlation between Meta and ConAgra is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Meta Data and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Meta Data 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 Meta Data are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Meta Data i.e., Meta Data and ConAgra Foods go up and down completely randomly.

Pair Corralation between Meta Data and ConAgra Foods

Considering the 90-day investment horizon Meta Data is expected to under-perform the ConAgra Foods. In addition to that, Meta Data is 3.19 times more volatile than ConAgra Foods. It trades about -0.03 of its total potential returns per unit of risk. ConAgra Foods is currently generating about 0.01 per unit of volatility. If you would invest  3,061  in ConAgra Foods on January 20, 2024 and sell it today you would lose (25.00) from holding ConAgra Foods or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Meta Data  vs.  ConAgra Foods

Meta Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ConAgra Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ConAgra Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, ConAgra Foods may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Meta Data and ConAgra Foods

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

The idea behind Meta Data and ConAgra 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.