Correlation Between Flowers Foods and Arion Banki

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

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

Diversification Opportunities for Flowers Foods and Arion Banki

0.0

Correlation Coefficient

Flowers Foods  Arion Banki

Pay attention - limited upside

The 3 months correlation between Flowers and Arion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Arion Banki Hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arion Banki Hf and Flowers Foods 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 Flowers Foods are associated (or correlated) with Arion Banki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arion Banki Hf has no effect on the direction of Flowers Foods i.e., Flowers Foods and Arion Banki go up and down completely randomly.

Pair Corralation between Flowers Foods and Arion Banki

If you would invest  2,463  in Flowers Foods on January 25, 2024 and sell it today you would earn a total of  6.00  from holding Flowers Foods or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Flowers Foods  vs.  Arion Banki Hf

Flowers Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flowers Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Flowers Foods may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Arion Banki Hf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arion Banki Hf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Arion Banki is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flowers Foods and Arion Banki

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

The idea behind Flowers Foods and Arion Banki Hf 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.