Correlation Between BBB Foods and Arion Banki

Can any of the company-specific risk be diversified away by investing in both BBB 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 BBB 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 BBB Foods and Arion Banki Hf, you can compare the effects of market volatilities on BBB 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 BBB Foods with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Arion Banki.

Diversification Opportunities for BBB Foods and Arion Banki

0.0

Correlation Coefficient

BBB Foods  Arion Banki

Pay attention - limited upside

The 3 months correlation between BBB and Arion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BBB 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 BBB 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 BBB 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 BBB Foods i.e., BBB Foods and Arion Banki go up and down completely randomly.

Pair Corralation between BBB Foods and Arion Banki

If you would invest  2,326  in BBB Foods on February 5, 2024 and sell it today you would earn a total of  111.00  from holding BBB Foods or generate 4.77% return on investment over 90 days.

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

BBB Foods  vs.  Arion Banki Hf

BBB Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BBB Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, BBB Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BBB Foods and Arion Banki

The main advantage of trading using opposite BBB Foods and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB 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 BBB 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.