Correlation Between Associated British and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and ConAgra Foods, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and ConAgra Foods.
Diversification Opportunities for Associated British and ConAgra Foods
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and ConAgra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and ConAgra Foods go up and down completely randomly.
Pair Corralation between Associated British and ConAgra Foods
Assuming the 90 days horizon Associated British is expected to generate 1.91 times less return on investment than ConAgra Foods. But when comparing it to its historical volatility, Associated British Foods is 1.11 times less risky than ConAgra Foods. It trades about 0.09 of its potential returns per unit of risk. ConAgra Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,884 in ConAgra Foods on January 20, 2024 and sell it today you would earn a total of 152.00 from holding ConAgra Foods or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. ConAgra Foods
Performance |
| Timeline |
| Associated British Foods |
| ConAgra Foods |
Associated British and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and ConAgra Foods
The main advantage of trading using opposite Associated British and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Artisan Consumer Goods |
| ConAgra Foods vs. Green Globe International | ConAgra Foods vs. Greenlane Holdings | ConAgra Foods vs. 22nd Century Group | ConAgra Foods vs. 1606 Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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