Correlation Between Tate Lyle and NH Foods
Can any of the company-specific risk be diversified away by investing in both Tate Lyle and NH 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 Tate Lyle and NH Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tate Lyle PLC and NH Foods Ltd, you can compare the effects of market volatilities on Tate Lyle and NH 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 Tate Lyle with a short position of NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tate Lyle and NH Foods.
Diversification Opportunities for Tate Lyle and NH Foods
Good diversification
The 3 months correlation between Tate and NIPMY is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tate Lyle PLC and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods and Tate Lyle 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 Tate Lyle PLC are associated (or correlated) with NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of Tate Lyle i.e., Tate Lyle and NH Foods go up and down completely randomly.
Pair Corralation between Tate Lyle and NH Foods
Assuming the 90 days horizon Tate Lyle PLC is expected to generate 2.41 times more return on investment than NH Foods. However, Tate Lyle is 2.41 times more volatile than NH Foods Ltd. It trades about 0.02 of its potential returns per unit of risk. NH Foods Ltd is currently generating about -0.01 per unit of risk. If you would invest 3,301 in Tate Lyle PLC on January 24, 2024 and sell it today you would lose (105.00) from holding Tate Lyle PLC or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.11% |
| Values | Daily Returns |
Tate Lyle PLC vs. NH Foods Ltd
Performance |
| Timeline |
| Tate Lyle PLC |
| NH Foods |
Tate Lyle and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tate Lyle and NH Foods
The main advantage of trading using opposite Tate Lyle and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tate Lyle position performs unexpectedly, NH 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 NH Foods will offset losses from the drop in NH Foods' long position.| Tate Lyle vs. Sun Life Financial | Tate Lyle vs. Roth CH Acquisition | Tate Lyle vs. Signal Advance | Tate Lyle vs. Video River Networks |
| NH Foods vs. Kellanova | NH Foods vs. Lancaster Colony | NH Foods vs. The A2 Milk | NH Foods vs. Artisan Consumer Goods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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