Correlation Between Darling Ingredients and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Darling Ingredients 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 Darling Ingredients and ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darling Ingredients and ConAgra Foods, you can compare the effects of market volatilities on Darling Ingredients 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 Darling Ingredients with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darling Ingredients and ConAgra Foods.
Diversification Opportunities for Darling Ingredients and ConAgra Foods
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Darling and ConAgra is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Darling Ingredients and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and Darling Ingredients 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 Darling Ingredients 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 Darling Ingredients i.e., Darling Ingredients and ConAgra Foods go up and down completely randomly.
Pair Corralation between Darling Ingredients and ConAgra Foods
Considering the 90-day investment horizon Darling Ingredients is expected to under-perform the ConAgra Foods. In addition to that, Darling Ingredients is 1.9 times more volatile than ConAgra Foods. It trades about -0.04 of its total potential returns per unit of risk. ConAgra Foods is currently generating about 0.0 per unit of volatility. If you would invest 3,185 in ConAgra Foods on January 20, 2024 and sell it today you would lose (149.00) from holding ConAgra Foods or give up 4.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darling Ingredients vs. ConAgra Foods
Performance |
| Timeline |
| Darling Ingredients |
| ConAgra Foods |
Darling Ingredients and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darling Ingredients and ConAgra Foods
The main advantage of trading using opposite Darling Ingredients and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darling Ingredients 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.| Darling Ingredients vs. Tyson Foods | Darling Ingredients vs. Cal Maine Foods | Darling Ingredients vs. Dole PLC | Darling Ingredients vs. Adecoagro SA |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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