Correlation Between Aryzta AG and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Aryzta AG and Farmer Bros 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 Aryzta AG and Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aryzta AG PK and Farmer Bros Co, you can compare the effects of market volatilities on Aryzta AG and Farmer Bros 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 Aryzta AG with a short position of Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and Farmer Bros.
Diversification Opportunities for Aryzta AG and Farmer Bros
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aryzta and Farmer is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Aryzta AG i.e., Aryzta AG and Farmer Bros go up and down completely randomly.
Pair Corralation between Aryzta AG and Farmer Bros
Assuming the 90 days horizon Aryzta AG PK is expected to generate 0.5 times more return on investment than Farmer Bros. However, Aryzta AG PK is 2.02 times less risky than Farmer Bros. It trades about 0.07 of its potential returns per unit of risk. Farmer Bros Co is currently generating about 0.0 per unit of risk. If you would invest 41.00 in Aryzta AG PK on January 31, 2024 and sell it today you would earn a total of 47.00 from holding Aryzta AG PK or generate 114.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aryzta AG PK vs. Farmer Bros Co
Performance |
Timeline |
Aryzta AG PK |
Farmer Bros |
Aryzta AG and Farmer Bros Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aryzta AG and Farmer Bros
The main advantage of trading using opposite Aryzta AG and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG position performs unexpectedly, Farmer Bros 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 Farmer Bros will offset losses from the drop in Farmer Bros' long position.Aryzta AG vs. Kellanova | Aryzta AG vs. Lancaster Colony | Aryzta AG vs. The A2 Milk | Aryzta AG vs. Artisan Consumer Goods |
Farmer Bros vs. Golden Agri Resources | Farmer Bros vs. Fresh Del Monte | Farmer Bros vs. Alico Inc | Farmer Bros vs. SW Seed Company |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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