Correlation Between Associated British and Leroy Seafood
Can any of the company-specific risk be diversified away by investing in both Associated British and Leroy Seafood 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 Leroy Seafood 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 Leroy Seafood Group, you can compare the effects of market volatilities on Associated British and Leroy Seafood 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 Leroy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Leroy Seafood.
Diversification Opportunities for Associated British and Leroy Seafood
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Leroy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group 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 Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Associated British i.e., Associated British and Leroy Seafood go up and down completely randomly.
Pair Corralation between Associated British and Leroy Seafood
If you would invest 2,987 in Associated British Foods on January 20, 2024 and sell it today you would earn a total of 79.00 from holding Associated British Foods or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Associated British Foods vs. Leroy Seafood Group
Performance |
| Timeline |
| Associated British Foods |
| Leroy Seafood Group |
Associated British and Leroy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Leroy Seafood
The main advantage of trading using opposite Associated British and Leroy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Leroy Seafood 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 Leroy Seafood will offset losses from the drop in Leroy Seafood's long position.| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Altavoz Entertainment |
| Leroy Seafood vs. Old Dominion Freight | Leroy Seafood vs. Torm PLC Class | Leroy Seafood vs. Procter Gamble | Leroy Seafood vs. Shagrir Group Vehicle |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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