Correlation Between Campbell Soup and Davidstea

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

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

Diversification Opportunities for Campbell Soup and Davidstea

-0.21

Correlation Coefficient

Campbell Soup  Davidstea

Very good diversification

The 3 months correlation between Campbell and Davidstea is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Davidstea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davidstea and Campbell Soup 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 Campbell Soup are associated (or correlated) with Davidstea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davidstea has no effect on the direction of Campbell Soup i.e., Campbell Soup and Davidstea go up and down completely randomly.

Pair Corralation between Campbell Soup and Davidstea

If you would invest  4,301  in Campbell Soup on January 25, 2024 and sell it today you would earn a total of  253.00  from holding Campbell Soup or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Campbell Soup  vs.  Davidstea

Campbell Soup

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Campbell Soup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Campbell Soup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Davidstea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davidstea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Davidstea is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Campbell Soup and Davidstea

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

The idea behind Campbell Soup and Davidstea 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.