diversifiable risk of combining ConAgra Foods and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Old Dominion Freight, you can compare the effects of market volatilities on ConAgra Foods and Old Dominion 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 Foods with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Old Dominion.
Diversification Opportunities for ConAgra Foods and Old Dominion
Pair Corralation between ConAgra Foods and Old Dominion
Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Old Dominion. In addition to that, ConAgra Foods is 1.16 times more volatile than Old Dominion Freight. It trades about -0.05 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about 0.24 per unit of volatility. If you would invest 39,424 in Old Dominion Freight on November 24, 2023 and sell it today you would earn a total of 3,018 from holding Old Dominion Freight or generate 7.66% return on investment over 90 days.
|3 Months [change]
ConAgra Foods vs. Old Dominion Freight
ConAgra Foods and Old Dominion Volatility Contrast
Pair Trading with ConAgra Foods and Old DominionThe main advantage of trading using opposite ConAgra Foods and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position. The idea behind ConAgra Foods and Old Dominion Freight 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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